Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — WALES

Transport Infrastructure

Dr. Marek: asked the Secretary of State for Wales what further proposals he has for improving transport infrastructure in Wales in general and in Clwyd in particular.

The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): My proposals for the motorway and trunk road network in Wales, including Clwyd, are in set out in "Roads in Wales 1985"—a copy of which is in the Library of the House—and I have also published a consultation document "Roads for Wales, the 1990's and beyond". I shall also continue to encourage and assist where appropriate those bodies responsible for the provision of other elements of the transport infrastructure in Wales.

Dr. Marek: Is the Minister aware of my early-day motions on British Rail management, Nos. 2 to 5 inclusive, and Nos. 7 to 16 inclusive, which illustrate merely some of the horrors being perpetrated on the people of Wrexham following the singling of the line between Wrexham and Chester? As the Minister did not take my advice that he should try to stop British Rail from singling the line, now that the evidence of incompetence and dreadful services is before his eyes, will he encourage British Rail to reinstate double track as soon as possible?

Mr. Roberts: I had noticed the early-day motions tabled by the hon. Gentleman, which appear to be rather more regular than the services that they describe. I must emphasise to the hon. Gentleman that the Wrexham-Chester line is an operational matter for British Rail. I understand that British Rail remains firmly of the view that when the singling work is complete this, together with other measures—for example, new signalling at Chester, automatic level crossings and new rolling stock—will greatly improve the services.

Mr. Best: Bearing in mind the tremendous increase in traffic that has been occasioned by the A55, and particularly the traffic going along the A5 on Anglesey, will my hon. Friend look carefully at the possibility of a bypass around Holyhead and instruct a survey to be undertaken? Will he also accelerate the provision of bypasses around the five villages on Anglesey?

Mr. Roberts: I am aware of the pressure that my hon. Friend is bringing on my Department about traffic on

Anglesey, and particularly on the A5. We have been studying the situation in various villages on Anglesey and we shall look at the Holyhead position as well.

Mr. Wigley: Will the Minister convey to the Secretary of State our best wishes for a speedy recovery and return to the House? As the Cabinet has been considering grave transport matters, particularly airports, and as no Welsh Office Minister has been in Cabinet, is this a reflection on the Welsh Office, or of the indifference of the Prime Minister towards Wales in general?

Mr. Roberts: I shall gladly convey the hon. Gentleman's good wishes to my right hon. Friend the Secretary of State, and I am pleased to tell the House that he is making a good recovery. As to Wales's interest in airports, I assure him and the House that the interests of Wales have not been neglected in any way.

Mr. Raffan: During the last Welsh Grand Committee my hon. Friend said that the Mold bypass was scheduled for the latter end of the orginal time band, in other words, no later than December 1988, but my right hon. Friend the Secretary of State said that it was planned for the early part of the new band, in other words, soon after January 1988. Will my hon. Friend confirm that the Mold bypass will be started during 1988? Will it be started early or late that year?

Mr. Roberts: The timing of the Mold bypass was discussed in the last Welsh Grand Committee, and I have nothing to add to what I said about it then. I assure my hon. Friend that we shall use our best endeavours to make sure that the bypass is started on time.

Mr. Roy Hughes: May I express my good wishes to the Secretary of State, and express the wish that he will make a speedy recovery? Does the Minister appreciate that, far from improving the transport infrastructure in Wales, British Rail has proposals completely to decimate the rail-freight netword in south Wales. Therefore will he intercede with British Rail management to prevent that ill-conceived plan coming to fruition?

Mr. Roberts: Although that is a matter for British Rail, I assure the hon. Gentleman that British Rail does not intend to decimate the freight service. Indeed, it is quite the reverse—British Rail wishes to strengthen the service. Although one can be critical of British Rail's activities in Wales, one must not neglect the fact that it is to invest some £55 million in improving Welsh services during the next four years.

Planning Appeals

Mr. Wigley: asked the Secretary of State for Wales how many planning appeals have been made to his Department during the last year for which figures are available.

The Parliamentary Under-Secretary of State for Wales (Mr. Mark Robinson): In 1985 my Department received 912 planning appeals, 239 enforcement appeals and 11 other miscellaneous appeals.

Mr. Wigley: Is the Minister aware of the grave misgivings in many parts of Wales, particularly in Gwynedd, at the way in which the Welsh Office upholds appeals about second homes in sensitive areas? As, in a project for 700 second homes in the village of Morfa


Bychan, which will become a town as large as Porthmadog if the project is implemented, an application going back to 1964 is now in dispute, will he give an assurance that the Welsh Office—in view of its acceptance of the local infrastructure plan and its designation of an SSSI on that exact spot in 1971—will stand up with the local community against such an outrageous development?

Mr. Robinson: Our view on the general use of occupancy conditions has not changed. As the hon. Gentleman is aware, all planning appeals go to the Secretary of State's inspectors, who take the decision. They have not been given any recent or fresh instructions. It is open to local authorities to purchase homes which they fear may be used for secondary purposes. In that event, they may use their in-year receipts, and it is always open to them to come to the Secretary of State with proposals if their in-year receipts have already been utilised. We have a recent example of a local authority where that has been done. The Morfa Bychan case is a matter for the local planning authority, Dwyfor district council, not for my right hon. Friend.

Mr. Gwilym Jones: As my right hon. Friend will know, this week his Department is holding a public inquiry into two planning appeals for Tongwynlais in my constituency. What provisions are possible for last minute representations, in view of the present postal strike in Cardiff in south Wales?

Mr. Robinson: Obviously I cannot comment on individual cases. However, if my hon. Friend is aware of people wishing to make such representations, and can get them to send their representations to the Welsh Office, we shall ensure that they are delivered to the inspector. Where planning appeals have not come to the Welsh Office because they have been affected by the postal dispute, we shall make arrangements for them to be taken into account.

Dr. Marek: Is the Minister aware of the ground rules for these appeals, that inspectors, in deciding these appeals, are influenced by his Department, and that there have been many decisions within the Principality which have been resented by the community, including in Wrexham, where appeals have been allowed for supermarkets on completely unsuitable sites and for cramped housing in areas where it should not have been built? Will the Minister see whether he can pay more attention to the expressed wishes of the community in deciding appeals when they come before him?

Mr. Robinson: The Government regard the right of appeal as extremely valuable in the planning process. The inspectors must take into account all material and relevant factors, including the wishes of the local community. The Secretary of State relies on the inspectors' reports.

Opencast Mining

Mr. Raffan: asked the Secretary of State of Wales when he will next meet the chairman of the National Coal Board to discuss opencast mining in Wales.

Mr. Wyn Roberts: No meeting has been arranged at present.

Mr. Raffan: Will my hon. Friend seek a meeting to dissuade the NCB from again applying to start opencast mining at Pont Einion Northop, on high-quality land in an attractive rural area? Will he take the opportunity to

remind the chairman of the NCB that the last application was rejected on the gound that need had not been demonstrated? Does my hon. Friend agree that one would be hard put to prove that need now that coal stocks are higher and oil prices have collapsed?

Mr. Roberts: It is for the NCB to decide whether there has been sufficient change in circumstances since the earlier decision on the Pont Einion site to warrant its making a fresh application. I cannot comment on the merits of the case, because the matter may eventually come before my right hon. Friend the Secretary of State for decision. The procedure on applications for opencast mining has changed since March 1984. Such applications are now dealt with as part of the normal planning procedures.

Mr. Coleman: Will the hon. Gentleman be careful in handling the applications, especially in view of the sensitivity in many areas of south Wales about opencast mining? Will the hon. Gentleman take care in granting applications by the NCB, in the face of often strong local opposition?

Mr. Roberts: I am well aware of that position. That was part of the purpose of changing the procedure, to which I referred in my previous reply. The Housing and Planning Bill provides for a simplification of the opencast procedures by abolishing the need for ministerial authorisation. Planning permission will still be required. We shall ensure that any proposals that come before us for decision are publicised and that full opportunity is given for representations to be made by interested persons. That is, in any event, our current practice.

Mr. Livsey: Will the hon. Gentleman do all that he can to encourage the NCB to become involved in deep mining, which is labour intensive, instead of opencast mining, which tends to be capital intensive and is highly destructive of the environment and the community in south Wales?

Mr. Roberts: Again I must stress that that is a matter for the NCB. Obviously opencast coal is not only cheaper but has a much lower ash and chlorine content than deep-mined coal, but the health of many deep mines depends on opencast coal for blending to provide an acceptable product for customers. Opencast mining and deep mining are complementary rather than competitive.

Mr. Barry Jones: We look to the Under-Secretary of State to assist the House, especially with the position in Wales as described by hon. Members. Does the hon. Gentleman know that in my constituency, in the Ewloe area, there is widespread condemnation of proposals to undertake opencast mining close to a primary school and housing development? The hon. Gentleman said that deep mining and opencast mining are complementary. Will he therefore tell the chairman of the NCB that, if the Bersham colliery in north-east Wales closes, the economy of north-east Wales will rock on its heels following the Courtaulds closure? Will the hon. Gentleman assure the House that, in spite of the steep drop in oil prices, there will be no new proposals for pit closures throughout the south Wales coalfields? I remind the hon. Gentleman that one in four men in the Welsh valleys is unemployed? That is far too high.

Mr. Roberts: The hon. Gentleman has asked a number of questions. I think I have said sufficient to show that


opencast mining is complementary rather than necessarily an alternative. The hon. Gentleman mentioned Bersham colliery. Of course, it is always a matter of great concern when a pit has to be closed. If such an agreement is reached on Bersham, the board is confident that it can offer alternative jobs to those wishing to remain in the industry. There are generous redundancy terms for those who choose to leave. It is too soon to judge the longer-term effect of the current movement in oil prices, but lower oil prices obviously emphasise the need for the NCB to be competitive and make every effort to improve productivity.

Housing Stock

Mr. Best: asked the Secretary of State for Wales what provision he has made in the current financial year for improvement of the housing stock and a reduction in the backlog of renovation grants.

Mr. Mark Robinson: Housing allocations for this year total £141·3 million, which is an increase of almost 30 per cent. over last year. Within this total we have made specially targeted supplements of £53 million for improvement of the housing stock and reduction of the grants backlog.

Mr. Best: Does that welcome and generous announcement not show that the Welsh Office is more than playing its part in providing better housing for Wales and that it is now a matter for the local authorities to complement it?

Mr. Robinson: I agree entirely with my hon. Friend. It is now important that local authorities fully spend the allocations which have been made available to them, as it will strengthen their case when we decide resources next year.

Mr. Anderson: Does the Minister agree that it is not only proper to compare this year against last year, but to compare the current allocation with the actual need of our housing stock in the Principality? Given that, is the Minister seriously telling the House that his expert's advice to him is that our housing stock is staying about the same, is it, as people tell us, declining into obsolescence?

Mr. Robinson: We are this year in the process of embarking on the biggest and most extensive house condition survey ever undertaken by the Welsh Office. We shall consider the results of that. I should also point out that the figure of spending of allocations this year compares with the equivalent figure in 1978–79, which was only £51 million at 1986–87 prices. Therefore, I think that it is a favourable improvement.

Sir Raymond Gower: In future consideration of this matter, will my hon. Friend and his right hon. Friend take account of the age of the Welsh housing stock? Does my hon. Friend anticipate a reduction in the great backlog in the various housing authority areas?

Mr. Robinson: That is specifically why we have decided to target certain parts of this year's allocation on the backlog of home improvement grants. Local authorities are aware of that.

Mr. D. E. Thomas: Will the Minister explain to the House and to his hon. Friend the Member for Ynys Môn

(Mr. Best) the reason for the very low level of capital allocation for that authority, which stands as low as £29 per head for 1984–85?

Mr. Robinson: The hon. Gentleman should know that we have also made available to Ynys Môn a special allocation to tackle the backlog, and it is aware of that.

Mr. Roy Hughes: Will the Minister realise that during the seven-year period of office of this Government the housing problem throughout Wales has got dramatically worse? When will the Government launch a real major housing drive to build the new dwellings that are required to tackle the massive problem of the huge stock of pre-1919 dwellings which lack even basic amenities? Surely, with this period of heavy unemployment, now is the time for action.

Mr. Robinson: That comes well from the hon. Gentleman. When the Labour party was in power between 1974 and 1979 it spent a mere £57 million on restoring the older housing stock, whereas we have spent £275 million. The Labour party also talks much about the public sector. It spent £86 million in Wales, while we have spent £208 million in the public sector. Therefore, our record stands comparison.

Assisted Areas

Mr. Gareth Wardell: asked the Secretary of State for Wales what was the percentage of the working population residing in assisted areas qualifying for regional development grant in Wales (a) March 1984 and (b) March 1986.

Mr. Wyn Roberts: Almost 90 per cent of the economically active population of Wales reside in an assisted area. Those residing in areas qualifying for regional development grant were 79·6 per cent. in March 1984 and 38·2 per cent. in March 1986 because of the Government's decision to focus that particular scheme on the areas of greatest need.

Mr. Wardell: Is the Minister not ashamed of himself? The percentages he has just given mean that the Government have reduced the percentage of the working population of Wales who qualify for regional development grant from almost 80 per cent. to 35 per cent. Does that not mean that the Government are using regional policy in a far less effective a way now and are contributing to Wales being one of the poorest regions within the European Economic Community?

Mr. Roberts: I completely disagree with the hon. Gentleman. He underestimates the value of regional selective assistance, which is available throughout the assisted areas. He is also underestimating the activities of the Welsh Development Agency, which has built over 1,100 advance factories in Wales since May 1979. There have been 1,153 offers of regional selective assistance since May 1979, giving 57,000 new jobs and safeguarding 31,000.

Mr. Abse: Will the Minister note that the anxieties in Wales over the administration and lack of monitoring of grants for selective assistance increased on Friday when it was made clear by the Attorney-General that investigations into fraud in the Parrot Corporation were being extended, and apparently will include members or past members of the WDA? As the Parrot Corporation now has


writs issued against it for more than £15 million, and its latest report showed that it had lost £500,000, will the Secretary of State make a full statement to the House and relieve the anxieties of the work force in my constituency in Gwent, who believe that there is something amiss in the administration, structure and relationship of the WDA with the Minister and the Parrot Corporation?

Mr. Roberts: The hon. Gentleman is right to say that the police are investigating the circumstances of the original investment in the Parrot Corporation. It is, as he understands, a matter for the Director of Public Prosecutions. I have no intention of making comments that might prejudice that matter.
Writs have been issued in the United States of America against the Welsh Development Agency and others, although the agency has not yet had such a writ served upon it. It is well known to the House that the Public Accounts Committee has made known its intention to look into the WDA's investment in the Parrot Corporation.

Mr. Best: Does my hon. Friend accept that resources should be concentrated on the areas of highest unemployment, such as the Holyhead travel-to-work area? Can he assure the House that the welcome initiative of enterprise in rural areas that was announced recently will be able to assist the small business sector in gaining finance and developing, which is so critical to overcoming unemployment in areas such as Anglesey?

Mr. Roberts: I am grateful to my hon. Friend. Of course, assisted area status has helped many parts of Wales, including Ynys Môn, which my hon. Friend represents. Unemployment was a significant factor in the review, but account was taken, too, of many other factors, such as the likely relative need for current and future employment. Account was also taken of long-term unemployment, occupational and other structures, economic activity rates and so on. The rural enterprise package will help rural areas—in other words, areas outside centres of population of 10,000 people or more.

Mr. Barry Jones: My hon. Friend the Member for Torfaen (Mr. Abse) made an important request for a full statement. When will the Minister make the statement for which my hon. Friend has been asking for many months?

Mr. Roberts: I understand that, in addition to the Public Accounts Committee, the Select Committee on Welsh Affairs will consider the affairs of the Welsh Development Agency. While police investigations are continuing and the matter is still with the Director of Public Prosecutions, it would not be advisable for me to make any further comment.

Mr. Gareth Wardell: On a point of order, Mr. Speaker.

Mr. Speaker: The hon. Gentleman should raise his point of order after Question Time.

Later—

Mr. Wardell: On a point of order, Mr. Speaker. I raise this point of order in my capacity as Chairman of the Select Committee on Welsh Affairs. Earlier this afternoon, the Minister, I am sure inadvertently, said that the Select Committee on Welsh Affairs was undertaking an investigation into the Welsh Development Agency. It is not so doing. Even if it were, can you confirm, Mr. Speaker, that this would in no way prejudice the Minister's making a statement about the Parrot Corporation?

Mr. Wyn Roberts: Further to that point of order, Mr. Speaker. I am happy to confirm that it is the Welsh Grand Committee, rather than the Select Committee which is to discuss the Welsh Development Agency.

Rhondda

Mr. Rogers: asked the Secretary of State for Wales if he will pay an official visit to Rhondda.

Mr. Mark Robinson: My right hon. Friend had intended to visit the Rhondda last Friday, but had to cancel his engagement. I undertook the visit on his behalf.

Mr. Rogers: I commiserate with the Secretary of State on his unfortunate illness. At the same time, I welcome back my hon. Friend the Member for Neath (Mr. Colman) after his recent illness.
I welcomed the Minister's visit last Friday as an interesting development in the Rhondda valley. Will he make the Secretary of State aware of the fact that male unemployment in the Rhondda valley is now almost 27 per cent., and that on the Penrhys housing estate, where more than 4,000 people live, male unemployment is more than 80 per cent.? An injection of capital and expertise are desperately needed to relieve the enormous problems that arise from those horrific unemployment figures.

Mr. Robinson: I join the hon. Gentleman in welcoming the hon. Member for Neath (Mr. Coleman) back to the Chamber after his recent illness.
In this financial year, £732,000 has been allocated from the urban programme to Rhondda borough council, and since 1982 £1·37 million in urban development grants has been allocated to Mid Glamorgan, promising 345 permanent jobs and 229 temporary jobs. As the hon. Gentleman is aware, six projects have been approved for Rhondda borough council at a cost of more than £1 million, promising 310 permanent and 142 temporary jobs.

NHS (Medical Staff)

Mr. Grist: asked the Secretary of State for Wales what has been the increase in medical staff serving the National Health Service in Wales since 1979.

Mr. Mark Robinson: There was a 13·2 per cent. increase in total whole-time equivalent HNS medical staff in Wales between 1979 and 1985. The whole-time equivalent increased from 2,001 to 2,266 over the period.

Mr. Grist: I should have liked my hon. Friend to give a clearer answer than that slightly jargonised one. Nevertheless, does not those figures give the lie to those who say that the Government are trying to run down and abolish the Health Service? Could he give the figure for centrally-funded operations for heart disease, which is, after all, one of the most dangerous aspects for the Health Service in Wales?

Mr. Robinson: I entirely agree with my hon. Friend's latter sentiments. South Glamorgan district health authority has been provided with funds to achieve a target of 600 cardiac operations a year, and in 1985 605 such operations were performed. In addition, a new cardiac unit capable of carrying out 1,100 operations a year is being planned and will be funded by the Welsh Office.

Mr. Wigley: Is the Minister aware of the crisis in Bangor with the lack of psychiatric beds in Ysbyty


Gwynedd hospital and a lack of staff to serve them? Is he aware that, compared with the standard 0·5 beds per 1,000 population, which should give 80 beds, there are now only 40, and that, to bring that up to a more acceptable level of 46, there would have to be 10 extra staff? Will he ensure that the resources are available to recruit those staff?

Mr. Robinson: There are new beds in Gwynnedd precisely for that purpose. The management of psychiatric beds is a matter for the health authority.

Employment Statistics

Mr. Roy Hughes: asked the Secretary of State for Wales what are the latest unadjusted figures for unemployment in (a) Newport, (b) Gwent and (c) Wales; what were the equivalent figures in May 1979; and what was the percentage increase in each case.

Mr. Wyn Roberts: The unadjusted March 1986 figures of unemployment for Newport, Gwent and Wales are, respectively, 10,047; 30,219; and 184,247. Unadjusted figures for 1979 were produced on a different basis and cannot properly be compared with this year's figures.

Mr. Hughes: Does the Minister recognise that seven years is a milestone in the life of any Government and that throughout that period we have had more or less catastrophic unemployment in Wales? The trend is still upwards and Welsh Office Ministers seem to have no answer to the problem. Therefore, is it not time for them to consider their position, or are they determined to con the people of Wales right to the very end?

Mr. Roberts: We are doing our utmost to help employment in Wales. A few moments ago I referred to the number of advance factories that have been built by the Welsh Development Agency, and it is now embarking on a further programme of factory building involving an outlay of £27 million. I can also safely refer to the special employment measures, which give help to 43,850 people, and there are welcome developments in the hon. Gentleman's constituency. I am always astonished that we never hear about those good developments from the hon. Gentleman.

Mrs. Clwyd: In that case, will the Minister act on the advice given by the coalfield communities campaign to the Select Committee on Energy last week, when it suggested that a package was needed for coalfield communities similar to that which the Government have put aside for the inner city areas? Will he also tell us how many jobs for ex-miners NCB (Enterprise) Ltd. has produced in south Wales?

Mr. Roberts: The entire purpose of the valleys initiative announced by my right hon. Friend the Secretary of State is to focus support on the valleys of south Wales, and, of course, the moneys to be spent under that initiative are additional to the moneys already being spent under the urban programme and other programmes intended to support the valley communities. NCB (Enterprise) Ltd. has £20 million to invest, and I know from my visit to the enterprise train in Cardiff last week that it is doing extremely valuable work.

GCSE Examination

Mr. Gwilym Jones: asked the Secretary of State for Wales if he will make a statement on the latest preparations for the new general certificate of secondary education examination and on the resources that have been made available.

Sir Anthony Meyer: asked the Secretary of State for Wales if he is satisfied with the progress of arrangements for the introduction of the general certificate of secondary education examination in Wales.

Sir Raymond Gower: asked the Secretary of State for Wales if he will make a statement on the extent of preparations for the introduction of the new general certificate of secondary education in Wales.

Mr. Wyn Roberts: Preparation for the introduction of the GCSE is well on course in Wales. We have made significant resources available for the special programme of teacher training, and have offered local education authorities funds to supplement the secondary school capitation allowance during the first two years of the new examination courses.

Mr. Jones: Does my hon. Friend agree that we should not lose sight of the fact that this new examination was generally welcomed as being superior to the existing examinations and therefore of advantage to school children? Accordingly, what reassurances can my hon. Friend give to parents in my constituency and throughout Wales who are gravely concerned that those advantages to their children are being jeopardised, or, at best, severely impaired, as a consequence of the teachers' dispute?

Mr. Roberts: My hon. Friend is right to say that when the GCSE was announced, as long ago as June 1984, it was very much welcomed by all educationists, and there is no doubt that it is superior to the 0-level and CSE examinations. Those who desire to delay the start of the course in September this year and the subsequent examination must think seriously about their motives for doing so. The GCSE has had unprecedented support from the Government—far more financial support than any previous examination and course.

Sir Anthony Meyer: In view of the importance of making it clear beyond peradventure that this examination will be introduced on the stated date and that action by the teachers' unions, which could conceivably damage the examination, cannot possibly postpone it, will my hon. Friend none the less consider giving additional weapons to those teachers who are doing their best to introduce the examination on time by considering whether there should be an increase in the capitation grant, particularly for science subjects?

Mr. Roberts: I assure my hon. Friend that the Government do not regard alteration of the timetable as an option. The additional moneys that have been made available, particularly for books and equipment, to supplement the capitation fees amount to about £2,500 per secondary school per annum over the next two years and to about £18 per GCSE pupil.

Sir Raymond Gower: Is my hon. Friend aware that numerous teachers, including some headmasters insist that they have no knowledge of these preparations? Does that not suggest a lack of communication between my hon.


Friend's Department, the education authorities and the schools? Will he therefore take emergency measures to get this message across?

Mr. Roberts: I do not think that that can be right. In written answers to the hon. Member for Meirionnydd Nant Conwy (Mr. Thomas) I have listed the GCSE inset seminars that took place between 20 January and 7 April this year. Notice of the start of the new examination course was given as far back as June 1984, explanatory leaflets were issued in January 1985, national criteria have been published and a great deal of money has been spent on seminars, training materials, inset funding and books.

Mr. Barry Jones: This is a good examination which is to make a lame start because of a tight-fisted Government. Will the Minister make available additional cash and give more time off to teachers so that they are able to prepare for the examination? There is a morale crisis among teachers and very great worry among parents, who are upset by the shortage of textbooks, equipment and teachers. Headmasters of high schools throughout Wales are anxious and are looking to the Minister for initiatives that will result in additional money and teachers.

Mr. Roberts: A will and a commitment are needed by all concerned to go ahead with the start of this examination course. I was glad to hear the hon. Gentleman commend it. We have spent £45,000 on seminars for teacher preparation and we are to spend an additional £15,000 on further seminars. A sum of £150,000, to be spent on training materials, is under consideration. Inset funding has received £427,000, at a rate of grant of 90 per cent. I have already given details of the amount of money to be spent on books and materials during the next two years. I am entitled to repeat that that kind of financial commitment represents unprecedented expenditure on a course of this kind.

Oral Answers to Questions — CHURCH COMMISSIONERS

Income and Expenditure

Mr. Chapman: asked the hon. Member for Wokingham, as representing the Church Commissioners, what amount and proportion of the Church Commissioners' total revenue derives from income arising from its assets; and what total amounts and proportion of expenditure goes in support of stipends and pensions.

Sir William van Straubenzee (Second Church Estates Commissioner, Representing Church Commissioners): From total revenue of some £140·7 million in 1985, £93·5 million, or 66·5 per cent., arose from their own assets, the remainder from parish giving and other local sources. From total expenditure of £138 million, £112 million, or 81·2 per cent., was spent on clergy stipends and pensions.

Mr. Chapman: Notwithstanding the welcome increase in recent years in parish contributions towards stipends, does my hon. Friend agree that his answer underlines the simple fact that the improvement of clergy stipends and pensions depends greatly upon the Church's income from its assets? Therefore, it is in the interests of everybody that the Church should be encouraged to invest in land and property, the stock markets, and in all other ways.

Sir William van Straubenzee: That is true. It is immensely important that the investment portfolio should

be well managed and that we should have a buoyant agriculture. Like many similar institutions, the Church benefits enormously when inflation is under control.

Mr. Frank Field: Should we not pay attention not so much to the Church Commissioners' portfolio, as to the amount that the laity gives? Is it not a matter of concern that as soon as a clergyman has children the family becomes eligible for family income supplement, and that those children are the largest single group to claim help under the assisted places scheme?

Sir William van Straubenzee: I cannot accept the hon. Gentleman's premise without first inquiring into the matter. However, I agree that there is a continuing duty to increase the laity's giving. That point is given constant attention by the joint committee charged with that task.

Clergy Stipends

Mr. Greenway: asked the hon. Member for Wokingham, as representing the Church Commissioners, what is the total raised towards clergy stipends in Easter offerings; and if he will make a statement.

Sir William van Straubenzee: The answer is approximately £200,000 a year or, on average, £25 per incumbent.

Mr. Greenway: Is my hon. Friend aware that on Easter Sunday I found in my place, just as I have every year of my life, a short note from the church warden saying that the ancient custom of the church is that Easter offerings shall be given as a personal offering to the incumbent? Is it not clear from what my hon. Friend has already said that that is not happening, and that Easter offerings are taxed? Will he join me in tackling our right hon. Friend the Chancellor of the Exchequer on that point and the Church Commissioners, in order to restore that true and traditional custom to its rightful place in the church?

Sir William van Straubenzee: I cannot answer for the tax side of the question, except to say that I have noticed that successive Chancellors of the Exchequer of all political parties have sought to find a method of identifying the source of income so that it need not be taxed. It was the General Synod's decision that the sums raised should be included in the central augmentation, and that is the authority under which we proceed.

Mr. Peter Bruinvels: asked the hon. Member for Wokingham, as representing the Church Commissioners, what was the average stipend for a clergyman on 1 January; how that compares with 1 January 1981 and 1 January 1976; if he will evaluate the benefits in kind, including housing, for each period; and if he will make a statement on the future funding of clergy stipends.

Sir William van Straubenzee: The estimated average stipend of an incumbent on 1 January was £7,197 compared with £5,185 in 1981 and £2,534 in 1976. The equivalent figures for the housing "benefit in kind" are £3,800, £2,800 and £1,700.
In 1985, 82 per cent. of the Church Commissioners' income was applied towards the pay, pensions and housing of the clergy and it is the Church Commissioners' hope to continue that level of support.

Mr. Bruinvels: I welcome the substantial increase in the clergy stipends and I am pleased to note that stipends


are ahead of inflation. Will my hon. Friend note the concern felt by parents, who are deterring their sons from going forward to the Advisory Council for the Church's Ministry as potential ordinants because they consider it to be a not necessarily financially worthwhile career? Will he do all in his power to publicise the new stipends and the fact that the housing part of the stipends is so high?

Sir William van Straubenzee: I am grateful to my hon. Friend for paying tribute to what has been done. Compared with 1985, there has been an increase in the stipend of 7·2 per cent., compared with inflation of 4·2 per cent. I am sure that my hon. Friend's question and my answer will help to publicise the issue. I am also sure that my hon. Friend will agree that a man offers himself for service primarily because of his vocation. The financial reward comes a long way behind that.

Oral Answers to Questions — PUBLIC ACCOUNTS COMMISSION

National Audit Office

Mr. Dalyell: asked the right hon. Member for Taunton, as representing the Public Accounts Commission, what economy, efficiency and effectiveness examinations of the use of resources by the National Audit Office have been carried out to date by its auditor.

Sir Edward du Cann: It is for the newly-appointed auditors of the National Audit Office, who come from the private sector, to decide whether to carry out such examinations. No reports of any such audits have, however, as yet been made to the commission.

Mr. Dalyell: In the light of the right hon. Gentleman's announcement to the Taunton Conservative Association at the weekend, I express appreciation of what the right hon. Gentleman did in his capacity as Chairman of the 1922 Committee in making facilities available for Back Benchers, and of what he did as Chairman of the Treasury Committee in increasing Parliament's effectiveness on policy matters. Has he had an opportunity to consider the case of Jim Smith, which I raised with him? Has he reflected on the use of whistle blowers and deep throats in saving the public purse vast sums of money?

Sir Edward du Cann: I do not know whether I am in order, but I must express my appreciation of the hon. Gentleman's generous comments, and I am grateful to hon. Members for their kindness.
I am aware of the hon. Gentleman's speech in the House on 25 March and have total sympathy with his objectives. I shall draw what he said to the attention of the Comptroller and Auditor General and our colleagues, the members of the Public Accounts Committee. If the hon. Gentleman wishes to correspond with me in any way about the matter, I shall be happy to go further and accept the responsibility of ensuring that the Departments concerned are made aware of his views.

Mr. Jessel: Is my right hon. Friend aware that the National Audit Office used its resources with great efficiency and effectiveness when last November it examined the proposal to set up a joint services defence school of music? Is he further aware that as a result the Public Accounts Committee also did excellent work and produced a report, which led the Government to reconsider

whether the Royal Military School of Music, which produces the finest military bands in the world, should remain at Kneller Hall, Twickenham?

Sir Edward du Cann: I am glad to have the opportunity to associate myself with the tribute that my hon. Friend has rightly paid to the admirable work by the Comptroller and Auditor General. In my opinion, for what it is worth, the whole business of efficiency in Government and the sensible spending of money is markedly assisted by the competence of those who work in the National Audit Office under his leadership. If we please my hon. Friend with his passion for music, I am doubly content.

Oral Answers to Questions — HOUSE OF COMMONS

Refreshment Department

Mr. Greenway: asked the Lord Privy Seal if he will make a statement on the arrangements authorised by the Catering Sub-Committee of the House of Commons (Services) Committee for the supply of goods to the Refreshment Department without charge and in connection with publicity within the House for the suppliers.

The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): The Catering Sub-Committee has not laid down any general policy on this matter. But I understand that the recent display of English apples in the Members' Cafeteria and Tea Room was specifically approved by the Chairman of the Sub-Committee in response to an initiative by the Apple and Pear Development Council.

Mr. Greenway: Will my right hon. Friend convey the thanks of hon. Members to the Apple and Pear Development Council for the excellent free apples and pears provided a fortnight ago? Will he encourage the council to provide more English apples such as Cox's Orange Pippins and Worcester Pearmains as a means of promoting the vigour and health of Members, of keeping the doctor away and of aiding a most important British industry?

Mr. Biffen: I shall certainly convey those thanks to the admirable Apple and Pear Development Council, and draw my hon. Friend's comments to the attention of the Catering Sub-Committee.

Mr. Tony Banks: Does the Leader of the House not find it unacceptable that in the Restaurants hon. Members can still purchase real turtle soup and frogs' legs? Will he instruct the Catering Sub-Committee to stop purchasing such obscene products?

Mr. Biffen: I would not normally buy those products at that price, but I shall convey those comments to the Chairman of the Catering Sub-Committee.

Oral Answers to Questions — LORD PRIVY SEAL

Mr. Jim Smith

Mr. Dalyell: asked the Lord Privy Seal what consideration he has now given to the case of Jim Smith, pursuant to his answer, Official Report, 25 March, column 879.

Mr. Biffen: I confirmed in my letter of 16 April 1986 to the hon. Member that I had asked my hon. Friend the


Minister of State for Defence Procurement to write to him about the issues raised on 25 March. He has now done so. The hon. Member has already approached Her Majesty's Treasury about its policy for payment of compensation and has received a reply.

Mr. Dalyell: Is the right hon. Gentleman aware that that ridiculous letter arrived half an hour ago? As an independent member of the public, what does the Lord Privy Seal think should be done to protect the interests of whistle blowers and deep throats who have saved the Treasury a great deal of money by their actions?

Mr. Biffen: The hon. Gentleman will appreciate that Ministers with departmental responsibilities for these matters can more appropriately answer that question. The hon. Gentleman will also appreciate that in the Easter and May Day Adjournment debate I said that I would contact my right hon. Friend the Secretary of State for Defence which I have done.

Mr. Campbell-Savours: Is the Leader of the House aware that it is now 12 months since I raised this matter, and I have repeatedly raised it. Is he aware that in the past 12 months I have driven much information on this matter into the Public Accounts Committee? That Committee may be about to report on those matters. Does the right hon. Gentleman accept that it is the only Committee in the House which is equipped to establish the truth of what happened in the case of the Aish company and Mr. Jim Smith?

Mr. Biffen: Earlier this afternoon I had the advantage of listening to the exchanges between the hon. Member for Linlithgow (Mr. Dalyell) and my right hon. Friend the Member for Taunton (Sir E. du Cann) on the work of the Public Accounts Committee in this respect. I shall take account of what the hon. Gentleman has said, and I am sure that hon. Members in all parts of the House will be interested in the findings of the Public Accounts Committee, whatever they are.

Mr. Soames: Does my right hon. Friend agree that if the Government were less secretive the House would be able to do its job a great deal better? What steps will he take to ensure that we can have a freedom of information Act?

Mr. Biffen: I think that that goes much wider than this question. In this respect, I point out to my hon. Friend that earlier in the life of the Government, in all good faith, we mounted a freedom of information Bill which encountered so much ambiguity and anxiety that, in the end, the measure ran into the ground.

Oral Answers to Questions — HOUSE OF COMMONS

Private Notice Questions

Mr. Dubs: asked the Lord Privy Seal if he will move to refer to the Select Committee on Procedure the present arrangements for private notice questions; and if he will make a statement.

Mr. Biffen: The arrangements for private notice questions are already within the general terms of reference of the Procedure Committee.

Mr. Dubs: Does the Leader of the House agree that the House gives Mr. Speaker far too little guidance as regards

which questions should be selected for private notice and which questions should be rejected? It is therefore our fault that Mr. Speaker is often subject to a great deal of controversy when he refuses a private notice question, as in the case of the question concerning Libya on 14 April. Would it not be better if, in the interests of this House and of Mr. Speaker, the Procedure Committee reconsidered the limited guidance we now give and considered whether it could be more extensive and helpful to Mr. Speaker?

Mr. Biffen: No, I do not think that I could agree with that proposition. One of the advantages of the present private notice procedure is, first, that it is private and not subject to contention on the Floor of the House, and, secondly, that Mr. Speaker does have a great deal of discretion.

Mr. Winnick: Will the right hon. Gentleman bear in mind that private notice question applications are an extremely important facility for hon. Members and that they should not in any way be undermined? Will the right hon. Gentleman also bear in mind that if the Government were more forthcoming in making statements on important items of business, there would be less need for us to put in applications for private notice questions?

Mr. Biffen: I agree entirely with the hon. Gentleman about the importance of private notice questions to hon. Members. I do not think that any analysis of the practice over the lifetime of this Government would suggest that we have made fewer statements than our predecessors.

Mr. Ryman: I support the submission of my hon. Friend the Member for Walsall, North (Mr. Winnick). I am always putting down private notice questions, and they are invariably refused.

Mr. Faulds: Mr. Speaker is a good judge.

Mr. Ryman: Is the Leader of the House aware that I put down a question on the prison officers' dispute—

Mr. Speaker: Order. Please do not say that.

Mr. Ryman: There is a need for the Government to volunteer statements to the House from the Treasury Bench before being pressed to do so by question, private or otherwise.

Mr. Biffen: In respect of private notice questions, I thought it was considered bad form to advertise one's failures. The hon. Gentleman raised the need for more Government statements. I assure him that if that were undertaken, it would not be long before hon. Members, quite properly, would complain that more and more prime time was being taken by Government statements.

Mr. Shore: The Leader of the House may or may not be right in his general expression of satisfaction with the present handling of applications for private notice questions. We also heard what he said about it within the Procedure Committee's terms of reference. Can he tell us when the Procedure Committee last considered this quite important matter?

Mr. Biffen: Not without notice.

Late Night Car Service

Mr. Peter Bruinvels: asked the Lord Privy Seal how many people are eligible for a free taxi home from the House of Commons after late night sittings; what was


(a) the cost and (b) the numbers involved in each of the past five years; and if he will take steps to extend this facility to right hon. and hon. Members.

Mr. Biffen: Staff of the House and certain other individuals who are on late duty when the House or its Committees continue to sit after 11 pm are eligible to use the late night car service at no cost to themselves. The statistics involving numbers and cost are complex and do not lend themselves to oral answer. I will, however, set out the information in the Official Report. There are no proposals to extend the facility.

Mr. Bruinvels: Does my right hon. Friend share my concern about the difficulty with which the House is now presented? It cost £56·8 million to run the House of Commons in the last financial year. Hon. Members speak late into the night, so staff have to stay here much longer than is necessary and therefore need a lift home. I am not suggesting that any hon. Member ought to have a free lift home, but surely the best solution would be for the House to stop sitting after 10.30 pm. There would then be no requirement for this taxation without representation and free taxis for many while hon. Members are left standing in the taxi queue.

Mr. Biffen: The House is sitting no later today in any significant sense than in, say, 1980–81. If my hon. Friend wants the House to rise that much earlier, he should note that that can happen only if the most frequent participants in our debate show some continence.

Following is the information:
Records of the number of persons using this facility are not readily available and could be obtained only at disproportionate cost. In 1982–83, however, a special survey was mounted which revealed that 2,956 taxis were used to carry a total of 7,288 passengers.

Cost of late night car service



£


1985–86
80,780


1984–85
64,016

Mr. Ron Davies: On a point of order, Mr. Speaker, arising from Question Time. On Welsh questions we reached No. 11 slightly after 3.10 pm, when questions to the Chancellor of the Duchy of Lancaster started. You managed to call all the hon. Members who had tabled questions for the Chancellor, and also several supplementaries. At 3.18 pm we came to questions to the right lion. Member representing the Public Accounts Committee. Again you managed to call those who wished to ask supplementary questions. At 3.20 pm, you managed to call all the hon. Members who had tabled questions to the Leader of the House, as well as several hon. Members to ask supplementary questions..
I understand, Mr. Speaker, that you cannot control the length of supplementary questions, nor the length of replies from the Minister. However, as only nine Members who had tabled questions for the Secretary of State for Wales were answered, would it be possible for you to examine the allocation of time for questions to the Secretary of State for Wales and other Question Times, so that Welsh Members have a fair crack of the whip?

Mr. Speaker: I am sorry that I did not manage to call the hon. Gentleman today. I was hoping to do so. The allocation of time for Questions is not a matter for me, but Welsh questions went on for a further three minutes beyond 3.10 pm, and we made up time subsequently.

Mr. D. E. Thomas: Further to that point of order, Mr. Speaker. Should not Welsh Members assist English Members in the disestablishment of the Church of England?

Mr. Speaker: That is not a matter for me.

Binary Nerve Gas Weapons

Mr. Denzil Davies: I beg leave to ask the Secretary of State for Defence, although I see that he is not here—I hope that he is not giving a radio interview in Scotland—a question of which I have given him private notice, namely, whether he will make a statement on the British Government's policy on the talks in NATO on a new generation of binary nerve gas weapons.

The Minister of State for the Armed Forces (Mr. John Stanley): I am sure that, if my right hon. Friend is giving a radio interview, he is not giving it in Scotland but at the Independent European Programme Group.
The Government note with concern the massive chemical warfare capability of the Soviet Union. We consider that the Alliance should continue, as its first priority, to work urgently in the current negotiations in Geneva for a comprehensive and verifiable global ban on all aspects of chemical warfare. A force goal requiring the United States to modernise its chemical weapons stocks with binary munitions is being discussed collectively within NATO in accordance with normal Alliance procedures. We believe that United States moves towards modernising its limited retaliatory capability with binary weapons will underline to the Soviet Union the benefits of reaching early agreement on a total ban. In the event that it is not possible to achieve such a ban, United States chemical weapons modernisation would contribute to upholding NATO's deterrent strategy of flexible response.

Mr. Davies: Is it not the case that a recommendation that binary nerve gas weapons should be part of NATO's armoury has already been accepted by NATO military representatives, including the United Kingdom representative? Is that recommendation soon to be discussed and considered by the civilian permanent representatives and Ministers of Defence, including the British Secretary of State for Defence?
Will the right hon. Gentleman tell the House whether one of the proposals is that the F111 aircraft based at Upper Heyford and Lakenheath should be equipped with chemical bombs—I believe that they are described as binary spray bombs in the trade—or are we to be told that the Government do not know, and apparently do not ask, what bombs can be carried by the F111s? Thirdly, is the Minister aware that if these proposals are accepted they will do considerable political damage to the NATO Alliance, especially at this time? Far from helping at the talks in Geneva, the proposals will jeopardise those talks and lead to a further escalation in the arms race. Will he make it clear that if necessary the British Government will veto these proposals and never allow these hideous new weapons on British soil?

Mr. Stanley: I can confirm to the right hon. Gentleman that the proposal for a force goal for the modernisation of the American chemical weapon capability has been considered by the military representatives. It has not yet been considered by the NATO ambassadors or by NATO Ministers. The right hon. Gentleman asked about basing in the United Kingdom. As I have previously made quite clear to the House, the United States Government have said that they have no plans to deploy binary chemical

weapons in any foreign country in peacetime, and that should such deployment be considered in future, they will consult beforehand with the countries concerned.
I do not agree with the right hon. Gentleman's assessment of the implications for arms control. As has been well demonstrated, the intermediate nuclear forces deployment has made the Soviet Union negotiate much more seriously than ever before about INF arms control. I assure the House most fervently that the priority of the Government is to continue to try to achieve a total worldwide ban on chemical weapons. The right hon. Gentleman spoke about escalation. The basic military position must be considered when talking about escalation. For many years, the Soviet Union has taken advantage of no modernisation whatever by the United States since 1969. The Soviet Union has established a massive chemical warfare capability and it is in the interests of everybody in Western Europe and of vital importance against that massive Soviet capability our chemical warfare deterrent is maintained.

Sir Peter Blaker: Is my right hon. Friend aware that every hon. Member on this side welcomes his restatement of the NATO objective of securing a comprehensive ban on chemical weapons? We agree with him that the present proposal before NATO is more likely to persuade the Soviet Union to agree to such a ban or to move towards such a ban than the point of view of the Opposition, which seems totally devoid of common sense.

Mr. Stanley: I entirely agree with my right hon. Friend. As he well knows, not having a retaliatory capability and not preserving chemical warfare deterrents confer a major handicap on one's own conventional forces; that process tends severely to reduce the nuclear threshold, which I hope every hon. Member will want to keep as high as possible.

Dr. David Owen: Will the Minister of State accept that while the Soviet Union has nuclear weapons, many of us accept the need for nuclear weapons to be deployed by NATO forces? However, we find morally repugnant the idea that Britain should give any support to the deployment of nerve gases that are a hundred times more potent than mustard gas. Such weapons are not necessary for NATO and it is a weapons system and a form of warfare that we should utterly condemn and not agree to deploy.

Mr. Stanley: As the right hon. Gentleman is aware, there is no question of deployment in the United Kingdom and our policy remains wholly unchanged. The right hon. Gentleman says that the deployment of such weapons is repugnant. I remind him that throughout the time he was Foreign Secretary the United States had a national chemical weapon capability.

Mr. Peter Viggers: Does my right hon. Friend agree that, despite our self-denial of chemical weapons, the Russians have continued to accumulate, to test and to deploy chemical weapons and have 80,000 specially trained troops and 20,000 special reconnaisance and decontamination vehicles? Surely this proves that unilateral disarmament does not work with chemical weapons or other weapons.

Mr. Stanley: I endorse what my hon. Friend has said. The lack of efficacy of one-sided disarmament is


graphically illustrated by chemical weapon development and by what he has said about the scale of the Soviet capability. It is estimated that the Soviet stockpile of chemical weapon agents totals 300,000 tonnes. It is a massive stockpile and the Soviet Union has a range of methods of delivering the weapons. I hope that every hon. Member recognises the crucial importance of deterring the Soviet Union from using that capability.

Mr. A. E. P. Duffy: The Minister has said that a decision has yet to be taken by NATO defence Ministers and by ambassadors. The right hon. Gentleman knows that, if the defence review committee establishes today a new generation of chemical warfare weapons as a force goal, it will become a common Alliance objective, to which Britain will subscribe. Despite him saying that the United States hopes that it does not have to stock chemical weapons outside the United States, what are the storage implications for Britain in certain circumstances?

Mr. Stanley: There are no storage implications, until such time as the United States approaches Britain and requests that chemical weapons be based in this country. The United States has made no such request and it has made it clear that such a request would not be made in peacetime.

Mr. Neil Thorne: Will my right hon. Friend confirm that it takes about three times as many men to perform a task in nuclear/biological/chemical kit than without it, and that if we have no such protection to afford our troops we shall require at least three times as many men as we already have? As the Soviet bloc already has three times as many men as we have, that would entail us having nine or 10 times the number of service men that we have now.

Mr. Stanley: I confirm what my hon. Friend says, which is that fighting a conventional war with one's own forces in NBC kit while the forces of other countries do not have to wear it would result in a serious degradation of one's conventional operating capability.

Mr. Roland Boyes: Does the Minister accept that we on the Opposition Benches agree that there should be a comprehensive and verifiable reduction in chemical weapon stocks? Does he agree also that the talks in Geneva are not advancing quickly enough? Does he accept that there is something illogical, contradictory and obscene about the argument that we must increase the number of chemical weapons before we can begin to reduce their number? The Minister says that everyone agrees with that argument, but I think that no one agrees with it.

Mr. Stanley: I see nothing obscene in the proposition that we should give ourselves the basic deterrent capability to ensure that these profoundly evil weapons are not used against our own people, whether civilians or service men, in western Europe.

Mr. Patrick Cormack: Is my right hon. Friend aware that every sane person hopes that a complete ban can be achieved, and that anyone who has

seen the extra vulnerability of our troops on the sparsely populated northern flank that would stem from the extra protective clothing that they would have to wear to withstand chemical weapons will understand at a stroke how expensive and disastrous a policy of unilateralism would be?

Mr. Stanley: I am grateful to my hon. Friend. He is entirely right to reflect on what he has seen and on his own experiences on the northern flank. Fighting in aircraft or in armoured vehicles on the ground in NBC kit would severely degrade our operating capability.

Mr. Eric Deakins: Why is NATO being asked to endorse these appalling new weapons for United States forces in the USA when it was not asked for its views on the introduction of the SDI or the updating of the American nuclear strategic deterrent?

Mr. Stanley: As the hon. Member knows, there have been detailed discussions with all the NATO countries on the SDI programme. He will be aware that it was one of the requirements for congressional approval, and a reasonable one, that the NATO countries, whose deterrent would be added to by these weapons, endorsed a force goal indicating that they favoured the deployment.

Mr. Anthony Nelson: Does my right hon. Friend accept that some of us who are the staunchest proponents of our nuclear strategic deterrent are nevertheless gravely concerned about the wisdom of developing and building up a stockpile of ever more hideous and novel means of killing one another? Will he confirm that, whatever decision the United States takes about acquiring and building up such a stockpile on its own territory, the Government will be no party to the acquisition of those stocks in peacetime by other NATO states?

Mr. Stanley: One can speak only for this country, and, as I have made clear, there is no question of the deployment of American binary munitions in the United Kingdom in peacetime. It is of paramount importance that the NATO countries, and in this case the United States, maintain a viable deterrent capability against the formidable chemical weapons stockpile that the Soviet Union has acquired.

Mr. D. E. Thomas: Is it conceivable that these weapons will be brought to Caerwent to the United States arms dump in a time of emergency? Has the Minister's deterrence argument developed into an argument for continuing modernisation of the deterrent capability? How will a chemical deterrent deter the Soviet Union, and how is that an additional component to the existing nuclear deterrent? Will he explain this development in his deterrence theory?

Mr. Stanley: I hope that the hon. Gentleman will cast his mind back 40 years, and recall that perhaps it was because both sides had a chemical warfare capability that chemical weapons were never used between 1939 and 1945.

Agriculture Council

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John Selwyn Gummer): With permission, I will make a statement about the meeting of the Council of Agriculture Ministers which took place in Luxembourg from 21 to 25 April 1986. I attended this meeting with my right hon. Friend the Minister, who is, unfortunately, ill and not able to be present in the House. After negotiations which lasted throughout the week, the Council reached decisions on farm support prices and related measures for 1986–1987.
The basis of the agreement is a freeze in common support prices, with substantial price reductions for certain Mediterranean products, in particular tomatoes and tobacco. Following recent currency developments, some changes in green rates were indicated. It was, however, important that these were not of such a size that they undermined the policy of price restraint. For this reason, the United Kingdom supported devaluations of the green pound, the green franc and the green punt which will increase support prices in national currencies by 2·75 per cent. in the livestock sector and by 1·35 per cent. in the arable sector.
Turning to specific commodities, the United Kingdom has been particularly concerned about the growing surplus of cereals, and we made it clear at the beginning of the negotiations that we intended to press for effective changes to the existing regime on a fair basis. I am pleased to say that the changes we have agreed in the intervention arrangements and in quality standards, together with the introduction of a 3 per cent. co-responsibility levy, will have the effect of substantially reducing the effective level of support. The co-responsibility levy has been agreed for five years, with provision for a report by the Commission after two years on how the system is operating. As the House knows, we would have preferred a straight cut in the price for cereals. However, the co-responsibility mechanism as agreed is a substantial improvement on the simplification of the Commission's original unsatisfactory proposals.
The levy will apply to cereals sold into intervention and act as a direct price cut, with a real effect on the market. The levy will be collected at the processing stage, but cereals processed on the farm will be excluded. We would expect to pay a proportion of the total levy which is close to our share of Community cereals production. An aid for small cereals producers will be introduced. The detailed arrangements for this remain to be decided.
The Commission's original proposals included an unsatisfactory price structure for barley and a big increase in the average threshold price for maize. We secured changes in the Commission's proposals to remove the barley price distortion and to provide for a lower increase in the average maize threshold price.
The support levels for rapeseed and sunflower seed will also be reduced, if the crops in the Community exceed a prescribed maximum guaranteed quantity.
The reduction in cereal prices will be of particular benefit to pig and poultry producers. The final form of the monetary compensatory amount reductions in this sector have yet to be decided, and the Commission will be submitting proposals on this in the near future. In the

meantime, increases in negative MCAs for pigs, eggs and poultry resulting from the recent realignment will be suspended until 1 June 1986.
For milk, I am glad to say that we resisted considerable pressure for a price increase. In addition, the Commission's proposal to change the fat-skim ratio was dropped. This will avoid adding to the costs of those food manufacturers who use skimmed milk.
Despite the very real steps taken by the European Community to reduce the milk surplus, culminating in the introduction of quotas, the Community is still a substantial over-producer of milk. Therefore, the United Kingdom was determined to secure a further reduction and so to cut this surplus. We were, however, insistent that the burden should fall equally on all member states. I am glad to say that, in the face of strong opposition from a number of countries, a further 3 per cent. cut in milk quotas was agreed. This will be effected over the next three years, initially through a Community buyout scheme, but if this voluntary system is not effective in all member states, it will be underpinned by compulsory reductions.
The maximum compensation chargeable to the Community budget for this scheme will be about 18p a litre over seven years. But each member state will be able to set the rate of payment according to its own circumstances. There is also provision for national schemes to continue alongside the Community scheme. We secured a provision which allows larger dairy farmers to sell part of their quotas under this scheme. Additionally, the arrangements to offset under-production of quota in one region against over-production in another will continue for a third year. This has given useful flexibility in the United Kingdom in each of the first two years of quotas.
For beef, we succeeded once again in securing an extension of the beef variable premium scheme unchanged. The maximum rate expressed in sterling will be increased as a result of the green rate devaluation. The Commission's proposals for reforming the regime for beef are to be further studied by the Council, with a view to the decisions being taken by the end of this year.
For sheep, we insisted on the removal of the proposed limit to the number of ewes per farm qualifying for the annual premium. We also secured the removal of the proposal to amalgamate Northern Ireland and the Irish Republic into a single region for the purpose of calculating ewe premium.
Turning to the budgetary costs, the Commission indicated that the package as a whole will produce a total saving over 1986 and 1987 of 777 million ecu, a saving of 118 million ecu greater than would have been achieved under the Commission's original proposal. There remains, however, a serious problem about the substantial additional costs resulting from changes in the relationship between the ecu and the dollar and from the realignment of currencies. In supporting the settlement, we made it clear that its budgetary implications would have to be referred to the ECOFIN Council. They are being considered today by the Council, which my right hon. Friend the Chancellor of the Exchequer is attending. We shall continue to seek a thorough examination of the scope for savings to minimise any supplemental budget this year.
Overall, this price fixing has produced a highly satisfactory outcome and one that follows closely the approach endorsed by the House, without opposition, on 10 March. The pressure on support prices in the


Community has been maintained. In particular, the effective reduction agreed for cereals marks an important step in the battle against surplus production. The outgoers scheme for milk is the next stage in bringing about a better balance between production and consumption.
By devaluing the green pound, we have ensured that our farmers are treated fairly in relation to producers elsewhere in the Community, including particularly France and Ireland. We have removed from the original package those key elements of discrimination to which this House rightly took such exception—the 25 tonne exemption for cereals and the limits on headage payments for beef cattle and sheep. Moreover, this settlement will have a negligible effect on food prices, which are, in any case, continuing to rise less than the rate of inflation. The package therefore represents a further significant step towards improving the common agricultural policy while safeguarding the competitive position of our own farmers. It is therefore good for Britain and good for Europe.

Mr. Brynmor John: I thank the right hon. Gentleman for his statement, the arrangement of which was conducted with all the consideration that we have come to expect of the Government.
Is the figure which the right hon. Gentleman has cited of 18p a litre over seven years correct? In my copy of the statement the figure is 17p a litre. The right hon. Gentleman will appreciate that other additions to the final draft were not communicated to me.
Will the right hon. Gentleman pass on to the Minister of Agriculture, Fisheries and Food our good wishes for his recovery from illness? Clearly, the Minister was suffering from the long Report and Third Reading stages of the Agriculture Bill. I am sorry that he is not in his place.
I welcome the ewe premium, which I thought at first was the first step in the Government's farm woodlands policy because "ewe" was spelt "yew" in my copy. I welcome the retention, however temporarily, of the beef variable premium. It would make no sense in the present climate if the Community scrapped the only policy among all its regimes that is good for farmers and consumers. I welcome also, because the measure was included in our amendment to the legislation on the milk outgoers scheme, the ability to surrender part of the milk quota.
The central judgment on this package depends on what it does to solve the long-term problems of the common agricultural policy. The Minister of State did not merely say that that was the best we could do in all the circumstances; he rhapsodised about it, saying that it was
good for Britain and good for Europe.
Other comments suggested that the package was a major step forward. It seems to be a case of optimism overcoming experience.
To describe the package in that way, the right hon. Gentleman must have some vision. Will it lead to a cut in the production of surplus commodities and, if so, by what percentage? If the right hon. Gentleman merely says that he will cut the rate at which the surpluses increase, I must tell him that that cannot possibly justify his description, because surpluses will continue to increase at a slower rate than previously. If the measures will not lead to a cut in production, does that not mean that, once again, Agriculture Ministers have dodged their responsibilities for a further year and have just looked at the matter on the basis that it will never arise?
What is the budgetary effect of all the measures? I have heard a great deal about the savings which are supposed to be effected. Does the Minister confirm that the effect of the loss in value of the American dollar means that £1 billion will be added to the agricultural budget of the EEC or, is it, as Agra Europ said this morning, E1·5 billion? If that is so, how is it to be paid for? Is it to be paid for by even further cuts in the present miserable regional budget or is it to be paid for by extra income? Will the right hon. Gentleman give an assurance to the House that under no circumstances will the EEC raise the take it has from the VAT in the current year, at present 1·4 per cent.? That is a crucial question. It was raised during the debate on the subject and it is a question which I think that the Minister has to answer.
On the milk outgoers scheme, is the Minister satisfied that the amount under the European scheme, whether 17p or 18p a litre over seven years, is sufficient to attract voluntary yielding of the amount of production? A large number of people believe that it is not. Therefore, resort to compulsion will be necessary. In which case, how is that to be done? I hope that the tenants' share of the milk quota is not to be based upon the formula that was suggested in the new clause to the Agriculture Bill for outgoing tenants.
I put to the Minister the fundamental irrelevance of the co-responsibility levy on cereals. It did not work on milk, so why should we think that it should work on cereals? What will the scheme do? As I understand it, it imposes only a percentage tax which is half as great as that which is necessary to make it self-supporting and after all, that is the basic tenet of a co-responsibility levy.
The Minister has mentioned the effect on consumers of devaluation of the green pound. One thing is clear, although he said that the overall effect is minimal; we will have to wait and see, but, according to the Minister, butter is to go up by 1p to 1½p a pound. How will that affect the hard-pressed dairy industry? We talk about a surplus to requirements of 16 per cent., but, if raising the butter price reduces consumption even further, will he not be compounding the problem of the dairy industry?
I conclude that the Government have been a party to a package which shirks the underlying long-term problems of the farm industry. When will the Council face up to the problems? Does it not mean that agriculture deserves more candour from its Minister, Europewide, than it is getting at present?

Mr. Gummer: If we were to have said in advance of the price fixing that we would have moved so far and made such major changes, many Opposition Members would have denied that possibility. They would have said that we were suggesting a major change which could not have been achieved. Therefore, I think that it is a little churlish of the hon. Gentleman to talk about a situation in which we have ensured that every nation has accepted what could be, if they did not get a voluntary agreement, a compulsory cut in their production of milk.
We have a co-responsibility levy which will have a direct effect on prices, we have stopped the pressures for price rises in milk, we have seen that there have been substantial price cuts in Mediterranean products and we have seen that there has been a 777 million ecu reduction in what would otherwise have been the cost. We have done


all those things and we have set this example within a change in the green pound rate which is less than might have taken place and less than many countries pressed for.
I agree with the hon. Gentleman that we will not solve all our problems by what we have done. When one is trying to move from massive surpluses, one can do so only in a way which gives the industry the time to make the necessary changes. There are limits to the weight one can put on farmers in any one year. If one looks at the substantial reduction in the price of cereals this year—cereals which have already been planted and the input costs of which have already been carried—one has to say that there is another side to the argument.
The hon. Gentleman will have to answer the farmers who will ask whether he was suggesting that, despite the increase in import costs and the reduction in the price of cereals, he would have increased the burden on farmers in this country. That is what the hon. Gentleman is saying. I hope that he will say that now in West Derbyshire and Ryedale and make clear exactly what he means. He clearly means the kind of weight reduction which it would have been impossible for farmers to bear in one year.
Of course, the hon. Gentleman is right to push us and see that we go on pressing for this change. However, there is a substantial change which we might not have expected otherwise. It would have been right for him to mention the extension of the BVPS. He made it sound as if that was an easy operation. Every year it causes difficulty because it is a system which we approve of but which other countries do not find acceptable. On this occasion, not only is it unchanged but clearly, its continuation is linked to the emergence of a new beef regime. It will be for us to see that we get a beef regime which suits the Community and Britain especially.
The hon. Gentleman specifically asked about the VAT. There is no question of breaking the VAT ceiling in 1986 and 1987. The Commission recognises that both the 1986 and 1987 budgets must stay within the 1·4 per cent. ceiling. We made that clear and it was clearly written into the minutes.
We believe that there is a difficulty with the milk outgoers scheme. I am sure that the hon. Gentleman will agree that, whatever price it is fixed at, one does not want to be spending more money than one needs to spend to get milk producers out. However, one must have enough, and we think that we have struck the right balance. We will be holding discussions with the National Farmers Union.
Of course the co-responsibility levy is not the way we would like to have done it. The hon. Gentleman is right. We would have preferred to have a direct price reduction. However, we have established a form of co-responsibility which is much fairer between the countries and which has many more of the effects of a direct cut in prices. That must be good.
The hon. Gentleman is right about the amount of the rise in the price of butter. It will be balanced by other reductions. I agree that we would like to have seen a reduction in the price of butter; that was our policy and we failed to achieve it. However, we achieved almost every other item on the milk side. I agree with the hon. Gentleman's comments about the increase in the price of butter. However, I think that it is only fair for him to say

that it is just as certain that there will be certain other reductions. That is why the situation generally will be somewhat neutral.

Several hon. Members: rose—

Mr. Speaker: Order. I have to take into account that we have a heavy day in front of us. I will allow equal time for Back Benchers—that is to say, 20 minutes for questions. I hope that in that time I may be able to call everybody.

Mr. Teddy Taylor: As we were told last year that strict budgetary controls were binding in the Council, can the Minister explain why, in the first year of restraint, he has passed a package which exceeds those controls? Can he also say what steps he is taking to ensure that those who are compensated for moving out of milk production will not begin to produce other commodities which are already in chronic surplus?

Mr. Gummer: On the second point, my hon. Friend knows that there are no rules to stop people from going into other forms of production. We are concerned to get people moving into things which are not in over-production and we are trying to arrange the regime so that we reduce the scope and the advantage of producing in those areas. My hon. Friend is perfectly right. There is no way in which we can stop people moving into another form of overproduction.
On the first point, I made it perfectly clear that the budgetary implications of this are being discussed at this moment at ECOFIN. However, the Commission has made it clear that it is intended that the budgets should be kept within the guidelines.

Mr. Richard Livsey: May I first send good wishes to the Minister, who I realised last week was suffering from ill-health. I wish him well.
We welcome the retention of the variable premium, what has been done with the sheepmeat regime and the devaluation of the green pound. That does not seem to be quiet sufficient. None the less, it is a move in the right direction. We are concerned that there appears to be no real resolve in the Community to reduce the surpluses. That especially applies to cereals. I believe that the Minister's estimate of 770 million ecu is somewhat at variance in that he said that it was a reduction. The estimates, by all accounts, appear on the supplementary budget which looks likely to come before us as a result of the settlement, and it could be an increase of 1·5 billion ecu or possibly 2·5 billion ecu, depending on the estimates. That is a serious problem. Sometimes farmers who most need support are not getting it, whereas the support prices are increasing the surpluses. Can the Minister make that clear?

Mr. Gummer: The hon. Gentleman cannot have it both ways. He cannot, on the one hand, object to the fact that the devaluation is not great enough, and, on the other, say that we are not trying to deal with the problems of surplus. He must accept that it was not sensible to have so large a devaluation that it would undermine the price part of the package. That would be unacceptable. The hon. Gentleman must get his act together on this. I realise that it would have been more electorally advantageous among the farming community to have a larger devaluation, but I think that those in the farming community understand that this was the right balance—to take into account the


changes in the currencies, and not to undermine the price package. I gave the figures precisely as they are. They are the figures produced by the Commission.

Mr. David Harris: Although I welcome many parts of the package, particularly my right hon. Friend's success in resisting special pleading by countries such as Ireland for exemptions from quota arrangements, will he try to convince me a little more about the corn surplus? Can he tell me why a co-responsibility levy for cereals might succeed, whereas the co-responsibility levy for milk clearly failed?

Mr. Gummer: It would be wrong to suggest that a co-responsibility levy on its own would have the effect that I hope this package will, but if the co-responsibility levy is taken together with the effects of the changes in intervention and quality, the effect upon the price of cereals is sufficient not only because it hits particularly at the intervention point to lower the general price of cereals, but because it should be the beginning—only the beginning—of a reduction in the attraction of growing cereals. That is the effect of the price process. It is not as much as we should like, nor is it as much as others would press us to achieve.
There is a balance between moving in this direction and laying on the shoulders of farmers who have already put their crops in the ground a burden that they find intolerable. I think that we have got the balance about right, but we must not give up because we must continue to the next stage. This is only the beginning of the stage dealing with the surpluses. My hon. Friend was right to make that point to us.

Mr. Eric Deakins: Is the Minister aware that Agra Europ, which, unlike the Minister, is impartial on these matters, described the cereals agreement as a dog's breakfast and a disgrace? Is the right hon. Gentleman now telling the House that the previous opposition of the Minister of Agriculture, Fisheries and Food to a co-responsibility levy on cereals was not based on principle, as the Minister led the House to believe, but was merely one of detail?

Mr. Gummer: The hon. Gentleman must not miss out the fact that I said absolutely clearly that we would have much preferred direct price reductions to the co-responsibility levy. Nobody has ever kidded anybody else on that. We have said that, because we were unable to achieve a direct price reduction, we sought to have the system of co-responsibility levy most likely to produce the effects that we wanted. We therefore got rid of the discrimination against the United Kingdom. We therefore saw that we had a much simpler method of having a co-responsibility levy. We therefore saw that it, together with the rest of the package, had a considerable effect on the price of cereals. We therefore produced not a dog's breakfast but the very best compromise that 12 nations can reach, and that was very much better than the hon. Gentleman thought we could do.

Sir Anthony Meyer: Is my right hon. Friend aware that this settlement will be grievously disappointing to the prophets of doom who forecast that it would be impossible to achieve any agreement whatever, and that he and his right hon. Friend the Minister of Agriculture, Fisheries and Food deserve the

warmest congratulations on getting the best possible settlement in the real world, which will be particularly welcome to Welsh sheep and beef farmers?

Mr. Gummer: I am sure that my hon. Friend will agree that on a day when we got 12 nations to agree on our agriculture policy, it was interesting that the Liberals produced two policies, one on agriculture and the other on the environment. Those policies were contradictory, the environment policy suggesting that we should go back to peasant farming.

Dr. Roger Thomas: As a direct consequence of what the Minister has announced today, what percentage fall will there be in the milk available for cheese and butter creameries? Can we look forward to further creamery closures and a further loss of jobs among people who are really outgoers but have no outgoers scheme of their own?

Mr. Gummer: The hon. Gentleman is right. If one reduces the amount of milk that is being produced by the 3 per cent. that we are talking about, that is bound to have a continuing effect of those who manufacture front milk. But the fact remains that those problems cannot be dealt with merely by ignoring the fact that, as a Community, we are producing about 14 per cent. more milk than we need. In those circumstances, it is proper for all of us to take an equal cut in the amount that we are producing.

Mr. Tony Marlow: My right hon. Friend said that it has been a highly satisfactory outcome—good for Britain and good for the Community. That is what has been said by his predecessors every single year that I have been here, yet the problems of the common agricultural policy get worse. In the immortal words of The Examiner, I wonder whether my right hon. Friend could explain? If he can do that, will he also tell the House, keen as he is to bring surpluses under control, by how much the surpluses will be reduced if we have the same weather patterns over the next 12 months as we had over the past 12 months?

Mr. Gummer: But would not my hon. Friend be more effective in his opposition to the common agricultural policy if he said today, "This is good as far as it goes, but it should have gone a lot further."? He does not do that, because it does not matter how far one goes in dealing with problems of moving from a Community that was set up to deal with shortage to a Community in a world with surpluses. However far we go down that road, my hon. Friend will not give at least a little credit where it is due. We have got 12 nations to move a long way down that road. We have much further to go down it. The package will have an impact on surpluses, but my hon. Friend must accept that surpluses grow at great speed as a result of technological change that no one forsaw 10 years ago. A great deal of change is required. One cannot ask the farming community to carry the whole of that change in too short a time, because that is not the nature of the agricultural system.

Mr. Nigel Spearing: The Minister said that the package is intended not to exceed the budgetary discipline by which the Government have set so much store. When will it be known whether this package breaks that discipline?

Mr. Gummer: The situation is simply this. The Commission has made it clear that this package will not


break the budgetary discipline. The discussion that is continuing at the moment in the ECOFIN council is about the exogenous elements, or elements that come from outside the decisions, which are supposed to affect the budget—in other words, things that are seen as extraordinary items. They are being discussed today in the ECOFIN council, and my right hon. Friend the Chancellor of the Exchequer is known to have a strong adverse view about the acceptance of things that are supposedly extraneous but which are in fact part of the system.

Mr. Albert McQuarrie: I congratulate my right hon. Friend, as well as my right hon. Friend the Minister of Agriculture, Fisheries and Food, on maintaining the variable beef premium and on their determined stand against the ewe proposals which, allegedly, were going to be put forward by the Commission. However, the increase in support prices will not compensate for the increased costs as it will probably result in a 10 per cent. increase to Scottish farmers. In addition, the reduction from 27p to 18p per litre of milk will make the scheme less attractive. My right hon. Friend referred to the fact that all member states have some licence. Will the Government take cognisance of the existence of that licence? If milk producers are assisted in one state, will we in this country give similar assistance to our milk producers, especially since the landlord-tenant sharing scheme is affected by the proposals?

Mr. Gummer: I hope that my hon. Friend will agree with me that in his general stance on the common agricultural policy, he is rightly concerned with the extension and increase of surpluses. He must therefore accept that, if we intend to reduce those surpluses, we cannot continue to increase the prices to farmers for producing surpluses. That would be wrong even where inputs increase. I hope that my hon. Friend does not want us to increase the price of milk and yet in some way to reduce the cut in the price for cereals. We cannot do that and carry out what my hon. Friend in other circumstances has been pressing us to do, which is to reform the CAP.
The Government will look carefully at the additionality of the outgoers scheme and will listen to representations from the National Farmers Union, the Scottish Farmers Union and others, to see that we get the balance right. We intend to ensure that outgoers are achieved voluntarily at a price which is not greater than it need be. If we pay more than is necessary, that will increase the cost to the budget. People have not lost that price; rather, they will be offered a lower price for going out. They still have a choice about going out.
If we are to solve the problems of agriculture, those who want to see an immediate and swingeing reduction which would damage our farmers irretrievably, must stay their hand. Similarly, those who want us to keep farmers' incomes up irrespective of the effect on surpluses, must also stay theirs. The right answer is to be found somewhere between those views; that is why I support the package.

Mr. Robert Maclennan: In giving the Government credit where credit is due, I think that the beef and sheep premia arrangements are useful. However, is not the Minister trying to have it both ways by over-selling the benefits of the package to the European taxpayer and under-estimating the lack of help

to the beleaguered farm industry in Britain as a consequence of the decline of incomes—according to the Minister's table 26 in the annual review—since the Government took office? Is it not even more serious that the Government have reversed their position over the cereal co-responsibility levy and are pursuing a chimerical policy which failed for milk and will fail to curb surpluses for cereals? When will the Minister discuss what is to replace the co-responsibility levy for cereals?

Mr. Gummer: The hon. Gentleman, I think, does himself a disservice in not considering the facts and again asking for the two impossibles. On the one hand he asks for more money for farmers for the very products which are in surplus, and on the other he attacks the Government for trying to do something about that. I have been frank with the hon. Gentleman and told him that I would much prefer to have had a reduction in price. However, we were unable to achieve that. We have achieved a package which is much closer to what we wanted than any hon. Member thought possible before we entered into the negotiations. The hon. Gentleman would do himself more credit if he were to recognise that.
The Government will take the hon. Gentleman's contributions on agriculture seriously when he recognises that his alliance partners should stop suggesting to farmers that they should return to being peasants, working with old-fashioned, out-of-date tools in old-fashioned and out-of-date ways.

Mr. David Heathcoat-Amory: In an earlier reply, my right hon. Friend seemed to be saying that the price fixing, with its attendant supplementary budget, was in line with the Fontainebleau commitment to financial discipline. Does my right hon. Friend really think that? He can reach that conclusion only by treating the depreciation of the dollar as an exceptional item. But he is a member of a Government who believe in freely moving exchange rates. Does he really think that the depreciation of the dollar and the consequential increase in agricultural expenditure is a truly exceptional item which permits us to break through the 1·4 per cent. VAT ceiling and the large supplementary budget?

Mr. Gummer: My right hon. Friend will accept that being a member of the Government has advantages and disadvantages. One of the advantages is that one can say quite clearly which are the things for which one is responsible and which are those for which others are responsible. I am responsible for ensuring that, when we come to a package of this sort, the package we deal with must be within the budget and that the Commission makes absolute assurances about VAT and its ceilings. We must then consider what we do about the suggestions that some extraneous items are not, after all, written into the Luxembourg agreement. We believe that it is our job to see how much of that can be covered by savings. We will continue to do that, and I stated that clearly in my statement.
In the ECOFIN meeting today and tomorrow, my right hon. Friend the Chancellor of the Exchequer will look very carefully at proposals and suggestions that there are some extraneous items. I have listed what those items claim to be and I have cast considerable doubt upon some of the suggestions that have been put forward. I am also conscious of the fact that it is easier to talk about the disadvantages to the budget when the dollar moves one


way, than to talk about the advantages to the budget when it moves in another way. Therefore, I hope that my right hon. Friend will accept that the Chancellor of the Exchequer will be raising the points which my right hon. Friend has just raised with fellow members of the Council.

Several Hon. Members: rose—

Mr. Speaker: Order. I shall do my best to call those hon. Members who have been rising regularly. I ask for brief questions, as that will lead to shorter answers.

Mr. Paul Marland: I congratulate my right hon. Friend the Minister and my right hon. Friend the Minister of State on their tenacity in these negotiations and on the fact that they have arrived at some kind of agreement before the harvest, but I should like to return, without apology, to the co-responsibility levy on cereals. The co-responsibility levy on dairy products did not work. Does not my right hon. Friend think that he is merely tinkering with the situation to introduce one now? Can he assure me that, during the next five years that the levy is to exist, he will look at other ways of curtailing production?

Mr. Gummer: I repeat to my hon. Friend that I see the levy as part of the package and not on its own. We have specifically pressed for and received agreement—there will have to be a report on the workings of the co-responsibility levy within two years—that the levy is not fixed permanently but is for a five-year period. We will, of course, continue to press the Community in the direction which both he and I want, to reduce the prices of surplus products and change the system of intervention to achieve the result we all want, which is to bring production and demand into kilter.

Mr. Tony Baldry: Will my hon. Friend confirm that this year's settlement will be fair to farmers without being a heavy drain on consumers and that it will have a negligible effect of food prices, yet, because of the devaluation of the green pound, farmers will get a reasonable increase in receipts? Does he also agree therefore that the package strikes a good balance between the interests of the farmers on the one hand and the consumer on the other?

Mr. Gummer: I am sure that this is the best balance that can be achieved in circumstances in which we are trying to reduce production. Those cannot be favourable circumstances for farmers. The improvements in farm incomes, which come from the realignments of the green pound, will be offset by considerable reductions which arise from the measures that we have taken. That is a fact of life which arises when we produce too much of certain products. However, I believe that this is a step which the farmer can bear and is a step in the important direction of bringing supply and demand into line.

Mr. D. N. Campbell-Savours: How will the small dairy farmer in the county of Cumbria, on the margin of profitability, be affected by the deal, specifically in connection with milk quotas?

Mr. Gummer: The effect on the small dairy fanner, as on other dairy farmers, is that there will be no increase in the price of milk. However, the small dairy farmer will have the opportunity of taking the outgoers scheme if that is what he wants.

Mr. Campbell-Savours: In other words, he will have to go on the dole.

Mr. Gummer: The hon. Gentleman is again very keen to press the disadvantages of the policy which he must want.

Mr. Campbell-Savours: The NFU asked me to ask the Minister that question.

Mr. Gummer: If the hon. Gentleman only knows what question to ask because he has been lobbied, then it would be better for me to answer the lobbyist directly.

Mr. John Carlisle: Will my right hon. Friend appreciate that many Conservative Members and specifically my farming colleagues, will not like the contributory levy although we appreciate my right hon. Friend's position on that. However, we appreciate that my right hon. Friend came out with the best deal at the end of the day.
Did the Commission and the Ministers consider the problem of the present surpluses? Does he understand that there are great difficulties in export markets for United Kingdom traders against our European counterparts? Was there any discussion of what we will do with the massive surpluses which exist now and of whether he can assist, in export terms, in getting rid of them?

Mr. Gummer: There will be a number of opportunities in the immediate aftermath of the general decisions—in the detailed ones—to consider what my hon. Friend has said. I know that he has some suggestions which I hope that we shall be able to take up with the Commission.

Mr. John: The right hon. Gentleman will appreciate that I am not unused to advocacy, but which of the three defences on surplus production is he running? Is he running the defence that, as a result of all the measures taken together, production of the regimes producing a surplus will fall, or that they will not fall themselves but that surpluses will rise more slowly, or simply that he does not know whether they will fall?

Mr. Gummer: My answer is simple. Our job is to reduce surpluses. That falls into two parts. One is that surpluses are rising all the time and so first we must stop them rising. Secondly, we must bring the total into line with what is needed, partly by increasing consumption and partly by reducing surpluses. All that I have claimed for this package is that it goes further towards the reduction of surpluses than any package which he or anybody else envisaged before we went into the negotiations.

Libya

Mr. Tam Dalyell: I beg to ask leave to move succinctly the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
to consider the contrast between the Prime Minister's explanation for permission to use the F111s from British bases and the explanation that is being given by the Pentagon and the contrast on the use of nuclear weapons.
I have to persuade you, Mr. Speaker, that the matter is definite. It may be unfortunate from the point of view of Parliament that an in-depth interview, such as none of us can give the Prime Minister, was administered by Mr. Gordon Clough yesterday on "The World this Weekend." In answer to Mr. Clough, the Prime Minister reiterated what indeed she had said in column 726 of Hansard of 15 April—that permission was given for the use of F111s because they were more accurate on particular targets, with the implication that they would save innocent lives.
I think that you will agree, Mr. Speaker, that Aviation Week and Space Technology, the most serious American journal, is very close to the Pentagon. In a major article on 21 April it said:
The Navy's carrier aircraft could have hit all the Libyan targets at the same time, but they would have been tight on assets. There were a lot of good reasons to include the Air Force F-111s,' a senior military official said. 'In most of the contingency planning for large air strikes by the Sixth Fleet, the F-111s from Britain are factored into the operation.'
The senior Pentagon official went on:
'"The Libyan attack provided a good proving ground for the F-111s to be flown in the Mediterranean … The ability to fly over France would have helped the mission considerably.
`Understandably, after the All-Navy action in Libya last month the Air Force wanted a piece of the action.' The official added 'The fact that the Defense Dept. budget is under consideration—and here was an opportunity to show how well the money is being spent on aircraft and weapons—was not overlooked by both services as a side benefit to the mission.

Another reason to include the F-111s in the operation was that it showed the support of Great Britain for our antiterrorist activities.'
Nowhere in that explanation is the point made by the Prime Minister. From the Americans we have contingency planning, proving grounds, the Defence Department's budget and Britain's support.

Mr. Speaker: Order. Will the hon. Gentleman bring his remarks to a close? He has had three minutes.

Mr. Dalyell: That is the definite aspect.
The urgent aspect is that there could be a repeat.
The important aspect is that nothing is more important than the truthfulness of the British Head of Government. Frankly, I think that the House of Commons has been given cock and bull tales and that yarns have been spun for us.
The matter also includes the nuclear—

Mr. Speaker: Order. The hon. Gentleman has had more than his time.
The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
the discrepancies in the Prime Minister's explanation on the F111s and the American version.
I have listened carefully to what the hon. Gentleman has said, but I regret that I do not consider the matter that he raises is appropriate for discussion under Standing Order No. 10 and, therefore, I cannot submit his application to the House.
Further application under Standing Order No. 10.

Mr. Eric S. Heffer: On a point of order, Mr. Speaker.

Mr. Speaker: Order. There is a further application under Standing Order No. 10 and then I shall take points of order.

Mr. Heffer: It arises directly—

Mr. Speaker: That may be, but I have called the hon. Member for Walthamstow (Mr. Deakins).

Agricultural Price Settlement

Mr. Eric Deakins: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the 1986 common agricultural policy price settlement,
about which we have just had a statement.
The matter is specific because we have just had the statement, and it is important for six reasons. First, the settlement has been described by an impartial news organ, Agra Europ, as a "price debacle". Secondly, the settlement will do little to stem the rising tide of CAP expenditure, especially on cereals. Thirdly, total spending will exceed the budget guidelines. The Minister of State, Ministry of Agriculture, Fisheries and Food has admitted that. That is serious because the Government's agreement to increase the VAT limit last year was based on the quid pro quo of financial guidelines being strictly enforced. The Government's faith is now shown to be completely unjustified.
Fourthly, CAP spending is completely out of control. The settlement will breach the barriers of the financial guidelines, which are now shown, in the Minister's words, to be worthless, because he has said that they cannot take account of extraneous factors such as currency movements, and there are currency movements every month. Fifthly, the settlement will require another supplementary budget on top of an existing supplementary budget, despite assurances given to the House by Ministers. That budget will increase the United Kingdom's financial contributions to the EEC and ensure that the VAT ceiling will be raised to 1·6 per cent. at the earliest opportunity.
Finally, the settlement will undermine the important constitutional case currently before the European Court in

Strasbourg, whereby the Council is disputing the Assembly's right to increase budget spending, because the Assembly's case was shown to have been proven by the fact that the Council's budget last year did not take agricultural spending fully into account.
The matter is urgent, first, because the statement has not given the House a full chance to express its total opposition to and concern about the implications of the package before decisions are implemented. We heard from the Minister that a meeting is going on today. Secondly, it is not a fit subject for an Adjournment debate. Finally, perhaps to anticipate something that you may have said on previous occasions, Mr. Speaker, in applications under Standing Order No. 10, the precedents in 1983, 1984 and 1985 are that after the announcement of the agricultural price settlement there was no subsequent debate on CAP pricing.

Mr. Speaker: The hon. Member for Walthamstow (Mr. Deakins) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
the 1986 CAP price settlement.
I have listened carefully to the exchanges in the House and I fully appreciate the concern which the hon. Gentleman has expressed and the importance of the subject. Nevertheless, he knows that I have to take into account the business before the House and whether this should have precedence over that. I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10. Therefore, I cannot submit his application to the House.

Mr. Eric S. Heffer: In view of the time and the fact that many hon. Members wish to debate the British Shipbuilders (Borrowing Powers) Bill, I shall write to you, Mr. Speaker, on the subject. It is a matter of importance, but I do not wish to delay the debate.

Mr. Speaker: I am obliged to the hon. Gentleman.

Orders of the Day — British Shipbuilders (Borrowing Powers) Bill

Order for Second Reading read.

The Minister of State, Department of Trade and Industry (Mr. Peter Morrison): I beg to move, That the Bill be now read a Second time.
If I make a rather shorter speech than usual, it is to give right hon. and hon. Members in all parts of the House, particularly the Opposition, the opportunity to make their speeches, as the hon. Member for Liverpool, Walton (Mr. Heffer) pointed out. Furthermore, as I have already explained to the Opposition Front Bench spokesmen, I have a back problem, which means that standing for any length of time is somewhat complicated.
I apologise on behalf of my right hon. Friend the Secretary of State for Trade and Industry for his absence. He would very much have liked to be here. However, as the Opposition know, he arranged a considerable time ago to be in the United States this week to talk about trade relations. My right hon. Friend will be following closely the Hansard report of the debate, as he considers shipbuilding to be one of his prime areas of responsibility.
The Bill is technical, but in no sense do I believe it to be unimportant. Our shipbuilding industry has a very long history. Thanks to Mr. Graham Day and his successor, Mr. Hares, who takes over later in the week, there have been enormous strides towards efficiency. The work force of British Shipbuilders has played an important part in that process and it believes that those strides towards efficiency are necessary.
The corporation's current borrowing powers are up to a maximum of £1,200 million. The House will recall that that limit was set in the British Shipbuilders (Borrowing Powers) Act 1983. It is likely that that limit will be reached at some stage during the summer, although I cannot say precisely when. That is the reason for the Bill. Its purpose is to increase to £1,300 million, and, at a later stage, to £1,400 million, subject to the affirmative resolution procedure, the amount that British Shipbuilders may receive by way of Government support. It is not related to public dividend capital, which is dealt with through the normal Estimates procedures; nor does the borrowing limit apply to grants paid under the intervention fund. Therefore, it is both a technical and an important Bill. Its introduction demonstrates the Government's continued commitment to British Shipbuilders.
Since 1979, £1,449 million has been paid by direct aid to British Shipbuilders. That is made up of just over £1 billion by way of equity and loan, £235 million by way of intervention fund and £177 million by way of the redundancy payments scheme. By any stretch of the imagination, there is nothing mean about that. Indeed, some of my right hon. and hon. Friends may consider that it is over-generous. However, I believe that the Government have struck precisely the right balance.
As the House appreciates, support alone cannot guarantee a future for the shipbuilding industry. I suspect that there is no right hon. or hon. Member who does not

realise that shipbuilding is a highly competitive, worldwide market and that at the best of times it is a market in which it is difficult to compete. I think that all right hon. and hon. Members will agree that today conditions are even worse than one dared to think that they would be as little as a year or so ago.
Why is this a complicated and difficult market in which to compete? It goes back to the first oil crisis of 1973. Since then capacity has far outstripped demand and restructuring has taken place. In western Europe there has been a reduction in capacity of about 50 per cent. In Japan, capacity has been reduced by 35 per cent. However, while that restructuring was taking place, China and Korea entered the market. Despite that, the market had ticked over until recently. In part that was due to what I describe as both visible and invisible subsidies, as a result of which there was a modicum of new orders. Recently, however, a dramatic change has taken place in the shipyards both of the far east and of Europe.
In Japan, for example, when Sanko—which has been, not perhaps completely single-handedly but to a major extent, responsible for orders for the Japanese shipbuilding industry—went out of business, Japanese yards had to lay off 10,000 workers, and there are calls for a further 20,000 job losses. In Korea there were no new orders in August and September of last year. Domestic orders have picked up in Korea since then, but it has shelved its plans for further expansion. There have been a few orders in Europe, but, even so, it seems that Sweden is reconciled to the closure of its nationalised industry, and Holland is cutting back on subsidies.
Despite the current depressed state of the market, the Government believe that British Shipbuilders must continue to concentrate on certain areas: cost effectiveness, competitiveness and having the right support at the right time. As all right hon. and hon. Members who take a close interest in this matter will appreciate, that is the main thrust of its corporate plan for 1985. After what I would describe as the successful completion of the sale of the warship yards, all these activities are concentrated in the merchant shipbuilding sector.
To maximise cost effectiveness, British Shipbuilders is doing certain things. It is concentrating on certain products, such as ferries, offshore supply vessels and diving supply vessels. Judging by its present work load, it is fair to say that that policy has been successful. It is securing better components at better prices. Thanks to its phase 5 pay and productivity agreement, it is adopting new building methods. That is a step in the right direction. It is also making appropriate capital investment. Since 1979, capital investment in the shipyards has been just under £330 million. It is investing in capital projects relating to CAD-CAM installations and, at a completely different end of the scale, upon the most up-to-date welding gear.
The corporation's order book is as follows. I am happy to say that there are ships to be finished in all of its yards. Govan has an order for a P and O ferry, which will take some time still to finish. Smith's Dock has three of the four Cuban ships still under construction, and Austin and Pickersgill has two advanced bulk carriers still under construction. Last Friday saw the naming by my right hon. Friend the Prime Minister of the Stena Seawell at Sunderland. Sunderland has a second diving support vessel on the stocks, as well as a very large crane barge for ITM. Ferguson-Ailsa has a number of small ships


under construction, and Appledore has two dredgers on order. However, when this work runs out, British Shipbuilders will face a major problem.
Against a target in 1985–86 of 200,000 gross tonnes of new orders, British Shipbuilders secured only 23,000 tonnes. I do not believe that that was because of lack of support. It was simply because there were remarkably few orders to be won, especially towards the end of last year. The latest figures I have for the world market last year show an order book at the end of 1985 of just over 25 million gross tonnes. That is the lowest level for three years. More significantly, it is very nearly the lowest level since 1979.
To put the decline of the industry into context, it is worth while to remember that the peak order book in recent times, that of March 1974, stood at no fewer than 133 million gross tonnes. That is more than five times the level of orders that we now have.
Building ships more efficiently is the key to delivering them on time and to the owners' satisfaction. I have already referred to the fact that my right hon. Friend the Prime Minister named the Stena Seawell last Friday. The delivery of that highly complex vessel on time and in perfect condition speaks volumes for the dedication and effectiveness of the Sunderland management and work force. It is the best kind of advertisement that the industry could have, and it is worth more than any amount of Government support. I am sure that all right hon. and hon. Members will join in applauding that success.
Against this background of the corporation's own drive towards cost effectiveness lies the support that we are continuing to provide. In this financial year we have made provision for an external financing limit of £73 million for British Shipbuilders, covering payment of public dividend capital to meet the needs of the corporation and intervention support for individual orders.
But as important as the value of support is the effectiveness of the manner in which it is provided. Not included in the British Shipbuilders' figures is the home credit scheme, which matches the financial terms that the United Kingdom owner ordering merchant ships could obtain if he was going overseas. But, as the House will appreciate, the key production aid is intervention fund support to bridge the price gap between United Kingdom costs and foreign prices. The present rate is 20·5 per cent. of contract price, although the Commission, which approves aid regimes within the present fifth directive on shipbuilding, will allow some flexibility on a case-by-case basis.
We are also ready to consider other means of support case-by-case, as the need arises, although always within the international rules which have to be observed as a framework if any sense of order in this market is to be preserved. I have already mentioned the present Community regime. As the House knows, we are now embroiled in the discussions in Brussels over the content of the Community regime to follow the fifth directive; the new measure which will govern the provision of aid to shipbuilding in the Community from the beginning of 1987.
We have already had a valuable session of the Council of Industry Ministers, which was attended by my hon. Friend the Under-Secretary of State. He made clear both our belief that aid for the industry will remain essential for some time to come, and that we are determined that such regulations as are introduced should cover all aids,

however given. As I have explained to the House, the United Kingdom aid regime is straightforward and transparent. It has to be said that those of some of our partners are much less so. In consequence, we have asked the Commission to ensure that it gets all shipbuilding aids in the Community on to the table and to make its recommendations for the next regime in the light of what is revealed by these inquiries. I am happy to report that the Commission is hard at work along those lines.

Mr. Frank Field: The Minister mentioned putting everything on the table, so is it possible to put on the table too the £37 million subsidy given to Harland and Wolff? Is the hon. Gentleman aware that when Northern Ireland's accounts were approved in the House, the Minister responsible gave us an assurance that none of that money would be used to win orders that could go to English or Scottish yards? When we ask questions, it is said that we cannot be told where that money goes because of commercial confidentiality. Is that not a topic that could well be considered by the National Audit Office?

Mr. Morrison: I know that the hon. Gentleman follows such matters closely and carefully, but I assure him that the Government looked carefully to ensure that the tenders from Harland and Wolff and from Swan Hunter were on a like-by-like basis. It would have been quite wrong and politically careless not to do that. But the hon. Gentleman will appreciate that the process took some time. There was the possibility of earlier decisions, but further checks were taken into account. I understand the disappointment felt about Swan Hunter, but no doubt the hon. Gentleman heard the statement last Thursday by my right hon. Friend the Secretary of State for Defence. Those matters were taken carefully and closely into account.

Mr. Frank Field: I was not specifically thinking of the order that was announced last week. No hon. Member can discover where that £37 million goes. As it is spent but we cannot find out on which orders it is spent, is that not a topic for the National Audit Office?

Mr. Morrison: I should be happy to look further at that point if the hon. Gentleman so wishes. However, I would not like to give any undertaking from the Dispatch Box. The hon. Gentleman will appreciate that Harland and Wolff does not fall within my ministerial responsibilities, but I am happy to look into the important point that he has raised.
As I said at the beginning of my speech, the Bill is very important. All those Opposition Members present and, indeed, those of my right hon. and hon. Friends who are present, have close connections with the shipbuilding industry. Their constituencies may be involved with that industry to the exclusion of all others, and I appreciate that this topic is important to them. I shall listen carefully to what they all have to say and will, with the leave of the House, reply to the debate.
I commend the Bill to the House. It represents a further strong indication of the support that the Government have already given British Shipbuilders over the years. That support has been very significant.

Mr. John Smith: As usual, the Opposition will not oppose a Bill that gives British Shipbuilders extra borrowing powers. But this is the


occasion for a very timely debate on the shipbuilding industry. It is clear to all who know about the industry that the merchant shipping side is approaching as serious a crisis as it has ever faced.
During the past few years the industry has shrunk, particularly in terms of manpower. Since 1979, we have lost 48,000 jobs in shipbuilding and ship repair. But even more important, a crisis is now imminent. The Minister read out the orders that are now with British merchant shipyards. But he failed to add that all of them are near completion. He did not mention any prospective orders. As far as I know, it is highly speculative whether any orders are in prospect. We face the awful truth that, as the year progresses, the time approaches when some of those yards will have no orders. If orders are not obtained very quickly, there will be a difficult gap to bridge if orders are subsequently obtained. I am sure that the Minister realises that a lot of preparatory work needs to be done before a ship is properly under construction.
Some commentators, including, I believe, the retiring chairman of British Shipbuilders, have said that the years between 1986 and 1990 would be the crisis years for shipbuilding. It is believed that it is possible to contemplate some rise in orders after then, because of the shipping industry's need for replacement orders. Whether or not that is true, the crunch has already arrived for British merchant shipbuilding. Capacity simply cannot be reduced further. If it is, it will fall below the minimum size necessary to retain a proper shipbuilding industry. There must be a minimum size to justify the design capability, the research and development effort and the substantial work force and management who are committed to the industry. If the industry contracts further, we shall cease to have an industry.
In 1986, shipbuilding in this country faces survival or extinction. Of course, the consequences of extinction are dramatic not just for the industry but for those areas of the country that are deeply dependent on it for their prosperity and employment. I need mention only Tyneside, Teesside, Wearside and Clyde, although there are more shipbuilding areas than that. However, those regions are particularly dependent on the industry, and it is unthinkable that ships should not be made on those principal rivers.
Other trades are dependent on the shipbuilding industry, ranging from those involved in the steel industry to those that produce fairly minor pieces of equipment. It has been calculated that there are at least three jobs outwith the shipbuilding and ship repair industries for every one job within them. Therefore, the consequences go much wider than just the shipbuilding areas, and affect many other parts of our manufacturing industry.
The tragedy for the industry is that a Conservative Government are in power at this time of crisis. It is now clear that the decision to privatise the naval shipyards was one of the most stupid decisions in the history of Government relationships with British shipbuilding. Just when the industry is at its most vulnerable, its most profitable part has been handed over to the private sector, leaving British Shipbuilders exposed.
The former chairman of British Shipbuilders, Sir Robert Atkinson, told us when privatisation was being considered that, if it took place, we would cease to have an integrated industry, and the Government would be

taking away the very capability which had helped it to survive and which would enable it to survive again through the difficult years ahead.
The industry would have had sufficient problems without privatisation, but with privatisation and its stunning financial effect on British shipbuilders the industry has been forced into an unnecessary crisis. A handicap has been imposed upon it just when there is a world slump in orders and a catastrophic decline in the United Kingdom merchant fleet. The problem for us is not a fall in orders but a relative fall in the British share of the market. Only about 2 per cent. of the world's shipbuilding orders come to Britain. Taking all that into account, the privatisation of the naval shipyards must rank as one of the most stupid acts of Government for many years.
We say that the industry must survive. The Government's clear responsibility is to ensure that it does. The crisis is one of depth as well as of timing. Speed is necessary if there is to be a chance of survival. It is clear from recent days and months that the Government do not understand that the timing of orders is of tremendous importance to both naval and merchant shipbuilding. If the timing is wrong, unnecessary damage will be caused.
I shall suggest a number of measures which, in addition to those which are under way, the Government should undertake to help the industry survive the crisis. First, there must be a proper Government procurement policy. Orders are available from the public sector. They should be organised and brought forward so that they are in time for the British shipbuilding industry. I hope that never again will orders go abroad such as that from Pacific Nuclear Carriers for an important nuclear carrier ship. For a British public sector organisation to give an order to another country is intolerable. The Government should have stopped that. I hope that if that occurs again it will be stopped.
The Minister should co-ordinate and bring forward as many public sector orders as can be found. I hope that he will not say that it cannot be done, because it was done under a Labour Government. Indeed, my right hon. Friend the Member for Glasgow, Govan (Mr. Milian) was responsible on a number of occasions for intervening positively—for example, on British National Oil Corporation orders. The Government should make an internal effort to co-ordinate and organise orders as soon as possible. That would provide an important breathing space for our merchant yards.
One initiative should be pursued vigorously by the Department of Trade and Industry. It affects in particular the Sunderland and Govan yards. I refer to the proposal by British Shipbuilders for the fleet support king 20/20 vessel. That has been developed extensively within British Shipbuilders and involves a new type of fleet auxiliary vessel. It has possibilities for foreign navies, but it is crucial that orders come from the Royal Navy to give it credibility on the foreign market. I do not suggest that it is a substitute for the auxiliary oiler replenishment vessels, but it is complementary to them. It represents a new opportunity for the British merchant yards by supplying naval orders, particularly abroad.

Mr. Bob Clay: And it is cheaper.

Mr. Smith: I have corresponded with the Secretary of State for Trade and Industry, who has passed the buck to the Ministry of Defence. Certainly my right hon. Friend


the Member for Govan and my hon. Friend the Member for Sunderland, North (Mr. Clay) will be pursuing this matter with the Ministry of Defence and the Department of Trade and Industry. I hope that the Department of Trade and Industry will not shuffle off responsibility, but will fight for this important new initiative for British Shipbuilders.

Mr. Clay: My hon. Friend was kind enough to show me a letter from the Secretary of State for Trade and Industry about the FSK. Does he share my view that it appears that the Secretary of State does not even know the Ministry of Defence's position? He just says that it is a good project and that he hopes that the MOD will order it. He does not seem to be aware that several weeks ago his colleague in the Ministry of Defence said that the MOD did not intend to order it.

Mr. Smith: It is clear that the Secretary of State for Trade and Industry is not aware of the Ministry of Defence argument that the ship would have to be armed. The Department of Trade and Industry and the Ministry of Defence should sort the matter out, and decide what is required and what would be suitable for British Shipbuilders to build. I hope that they will bear in mind the enormous importance of putting in an order in view of the enormous export potential involved.
The Government must increase their support in various ways. I think in particular of the shipbuilding intervention fund. The Minister of State said that the Government are pursuing the matter within the EEC, but previously targets have been set but not achieved. I hope that that will not happen again.
When we enter negotiations to safeguard our national interest we are not helped by free market speeches inside and outside the four walls of the Community. If the Government continually argue a free market policy they have little credibility when they come to argue in favour of an interventionist policy in terms of our national interest within the EEC. It would be helpful if the Government abandoned their free market postures because it is crucial that we gain as much advantage as possible from the shipbuilding intervention fund.
In addition, I hope that the Government will examine the possibility of further United Kingdom support packages for the industry. Other Governments provide such packages and this Government should. I draw attention to one example. The report on European maritime transport policy published recently by the other place recommends that the British Government should re-examine the limit on loans. Currently an eight-year limit on loans applies to shipowners who buy vessels from British shipyards. That conforms with OECD guideline. It is well known and documented that other Community Governments give additional support. The report argues that there should be a 12-year loan capability. The Government cannot say that it is impossible to allow such a loan capability because other Governments with the same obligations allow it. That possibility must be examined urgently.
I hope that the Government will further examine the extension of credit packages. My hon. Friend the Member for Sunderland, North will, no doubt, tell us about his interview with the Prime Minister a few days ago in his constituency. If the Prime Minister is claiming that credit packages in Britain are as good as in other parts of the

world, or that they can be made available, we want clarification as soon as possible. The Government should be putting their whole effort into finding ways of keeping the industry in existence.
There can be few occasions when the future of an entire industry becomes at stake over a short period. From time to time particular parts of a certain industry get into difficulty. They can be helped when they need to be helped, but I cannot think of a recent example of the whole of an industry facing a crisis of existence in a period of only a few months. The months of crisis are here now and the future of the industry will be decided in the next few months. That is why it is crucial that urgent action be taken by a Government determined on one policy objective—the survival of the industry. Without that the industry will face extinction with consequences which are too frightening to contemplate for the country's manufacturing potential, for certain areas and for a series of ancillary trades.
I am sorry to say that the Government's approach reveals that they do not understand the task or the seriousness of their responsibility. The Opposition have that awareness and we shall campaign with ceaseless vigour to ensure that the British shipbuilding industry survives for the future.

Mr. Patrick Nicholls: We know that the purpose of the Bill is to increase from £1,200 million to £1,300 million the corporation's borrowing limit. We know that because my hon. Friend the Minister has told us so. I suppose that we could also discover the purpose by reading the Bill, but clause 1(1) runs to about 14 lines and contains a plethora of brackets. It is a feat to read that clause to oneself—out loud or in silence—and so ensure that the inflections, the brackets and finite verbs fall in the right place; but finally the subsection yields up its secrets. I think, in the end, I would have been able to find the answer without my hon. Friend telling me. I suspect that a bracket is missing from that subsection, but for the life of me I could not suggest where it should go. This is a drafting point—and perhaps as a lawyer it appeals to me—but that subsection is in a league of its own.
It has already been said—and it will no doubt be repeated—that this is a long-standing problem In fairness, the right hon. and learned Member for Monklands, East (Mr. Smith) did not suggest that it was anything but a long-standing problem. Some of the correspondence which I have received concerning the fate of the British merchant fleet suggests that it is an immediate problem. Correspondents argue that, because it is so immediate, it is the responsibility of the Government. From the right hon. and learned Gentleman's speech I detected a recognition of the fact that the problem goes back a great deal further and that it cannot be attributed to the Government. I certainly would not argue that, because it is not the responsibility of this Government, it is necessarily the responsibility of the previous Labour Government.
The lack of orders represents the problem of present overcapacity. Two years ago, the worldwide excess in shipping capacity reached 120 million DWT which represented an excess capacity of 30 per cent. in oil tankers, 22 per cent. in combined vessels, 20 per cent. in liners and 7 per cent. in container ships. That represented—no pun intended—the high-water mark. That situation


has been partly ameliorated by the scrapping of capacity, but there is still an overcapacity of between 40 and 50 per cent. I agree with the right hon. and learned Gentleman that the solution to overcapacity will not emerge until the 1990s.
The problem facing the shipbuilding industry was recognised as long ago as 1975 by Mr. Eric Varley, the then Secretary of State for Industry, when he said:
The prospects for shipyards throughout the world are bleaker than perhaps at any time during the past 20 years. The demand for new merchant ships, especially oil tankers, has slumped to almost nothing. Existing orders are currently being cancelled."—[Official Report, 2 December 1975; Vol. 901, c. 1460.]
In 1978, the right hon. Member for Manchester, Gorton (Mr. Kaufman), in his capacity as Minister of State, Department of Industry, when introducing the shipbuilding redundancy payments scheme, said:
shipbuilding industries all over the world are facing the inevitability of contraction and this country cannot isolate itself from that trend."—[Official Report, 16 January 1978; Vol. 942, c. 175.]
The Government and the previous Labour Government faced the consequences of a contraction of world trade. What can be done about that? My hon. Friend the Minister said what the Government will do to meet that threat. There must be two broad approaches in Government policy. One must try to stem the losses and the other maximise the potential. The Government committed themselves to returning to the private sector the warship building yards in an attempt to stem some of the losses. Since 1979 the Government have invested £1,449 million. One may argue whether that is too much or too little.
Some of the correspondence I have received has stressed that this country is worse off than other countries. Some argue that, therefore, the contraction in the merchant shipping industry is faced only by this country. If our performance was substantially worse than that of our competitors, it would be an accusation with which the Government would have to cope. However, when one studies the comparative state of affairs in the competitors' yards, it places our own position in perspective.
In 1984–85, British Shipbuilders won 1·7 per cent. of new orders compared with 1·8 per cent. in 1980–81. Japan's performance is often used to criticise ours, but its share of the world market fell from 54 per cent. in 1983–84 to 38 per cent. in 1984–85. Exports from Japanese shipyards have slumped to their lowest level since 1978, and there is no improvement in sight. The shipbuilding division of the large Hitachi Zozen combine was reported to be working at barely 60 per cent. of capacity at its six yards in March 1984. This month, the major Japanese shipbuilders reached an agreement to cut capacity by 20 per cent. during the next two years.
In 1975, Swedish yards employed 28,000 people, but by 1983 the figure was less than 8,000. The Kockums yard underwent severe restructuring, and in 1982 it turned consistent loss-making into a small profit.
Norway has only two ships of any real size on its order books and its yards gained little significant work during the year.
In West Germany, the new orders received in 1983 dropped from 4·4 per cent. to 2·4 per cent. In March 1984, the Financial Times reported that HDW had been forced

to close its merchant shipbuilding yard in Hamburg and A G Weser, part of the Krupp group, had closed its large yard in Bremen, with the loss of 2,000 jobs.
France, however, after years of declining orders, has achieved success, but only with a massive injection of state aid. I am not trying to be contentious, but I think that most people would agree that the famous Polish shipping contract of the 1970s was not especially helpful. It was an example of getting business, provided that one was prepared to pay for it. France might have begun to go down a path which we have already been down.
The Government, through subsidies, have ploughed almost £1·5 billion into the shipbuilding industry. One may argue whether that is the right figure. I do not believe that the Minister would claim to be able to justify that figure to the nearest pound, but it is clear that an industry is not benefited simply by pouring money into it in the face of logic, the facts and world trends. It is no use pouring in money in an undisciplined way simply because one wants to protect the industry. If such a method saved industry, any Government would use it, but it does not. The Government are in the unenviable position of having to use a Solomon's touch. They must pluck out of thin air a sum which recognises what ought to be done and where the British industry stands in the world pattern.
Every week, I have to talk to my constituents about so-called cuts and the money that the Government have ploughed into a range of public services and undertakings—there is a substantial port in my area—but I have to tell them that there is a limit to how much can be ploughed in. Bearing in mind the world pattern and how we are faring, the money that the Government have put in is about right, although even my hon. Friend would not justify it to the last pound.
The Government's policy and financial input can be commended. The Bill is consistent with those elements. I understand that there will probably not be a Division. If we were pressed to a Division, I should have no trouble in supporting the Bill.

Mr. Bruce Millan: I was not sure what the hon. Member for Teignbridge (Mr. Nicholls) was arguing except, perhaps, for the closure of the British merchant shipbuilding industry. As for Government expenditure and subsidy, I did not hear any of the hon. Gentleman's colleagues recommending earlier the closure of agriculture, which legitimately receives large sums of public money.
I am glad that we have the opportunity to discuss merchant shipbuilding, as much public attention has legitimately been given to the problems of naval shipyards and the auxiliary oiler replenishment vessel recently. As my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) said, the present crisis in British merchant shipbuilding could be terminal. We now have a rump of what the industry used to be. British Shipbuilders employs only about 10,000 people in merchant shipbuilding and, unless firm orders are obtained soon, about 4,000 of them will be made redundant by the end of the year and the rest will go during 1987. That is the extent of the crisis.
The Minister mentioned the 23,000 tonnes of orders that have been obtained in the past financial year. That should be compared to the 200,000 tonnes target. It is insignificant in terms of keeping the industry going. The


lack of orders at my Govan yard is critical. Of course there is a world problem. Nobody is disputing that or suggesting that we can isolate ourselves, but some hon. Members tend to speak as though no orders are being placed. That is not so—l3 million tonnes of shipping was ordered in 1985, of which we got 20,000 tonnes.
In 1984, rather more than 15 million tonnes was ordered and in 1983 19 million tonnes was ordered. The reduction is significant, but a substantial tonnage was available in 1985. Not all of it was available for tender by British Shipbuilders, however, for a variety of reasons, including the fact that many countries protect their industries. That makes competitive bidding by British Shipbuilders or other Western companies impossible.
The rundown of the Japanese and South Korean industries has been mentioned, but Japan still has an order book of 9·7 million tonnes as compared with Britain's 350,000, all of which is under construction and will run out in the next year or 18 months. South Korea has 4·7 million tonnes of orders. European industries might be more analogous to ours, but West Germany, Finland, Denmark, Italy and France all have fuller order books than us.
Describing the problem does not solve it, but it shows that we should not give up and believe that our industry must go into liquidation. There are orders about, but we have not got anything like enough of them. If the industry is to survive, we must exert more pressure than have any previous Government to ensure that such public sector ordering as there is is placed with British yards.
It is scandalous that any public sector organisation should place an order abroad. There was a danger a few years ago of a Central Electricity Generating Board order for three colliers going abroad. Only political pressure brought it back to the United Kingdom. It was placed with Govan Shipbuilders, which delivered all on time. Indeed, at least one collier was delivered ahead of the delivery date.
I noted what the Minister said about the intervention fund. It always seems absurd to go through the rigmarole of setting a limit to the fund and then not using the money because no orders come along. It would be much cheaper to provide some intervention fund assistance to obtain an order than to pay for a yard's rundown or for redundancy payments because orders are not obtained, to say nothing of the human, industrial and economic considerations.

Mr. Peter Morrison: Perhaps I can help the right hon. Gentleman. I said earlier that there is some flexibility in the intervention fund. British Shipbuilders has not approached us about flexibility for an order, but we are prepared to examine each case as it comes.

Mr. Milian: That is extremely helpful. Perhaps the Minister can also be helpful concerning credit terms. Like my right hon. and learned Friend the Member for Monklands, East, I noted what the Prime Minister said at a meeting in Newcastle last Friday.
I would like the Minister to say that the Government will guarantee that no orders will be lost by British Shipbuilders simply because of inadequate credit terms, and that if they can compete with international competitors in terms of price—with intervention fund assistance where necessary—delivery dates and technical specifications, they will not lose orders because of inadequate credit terms. If such a statement could be

made, it would be very helpful in the context of this debate and in the context of the Govan yard, which is interested in the attempts that British Shipbuilders is making to obtain container ship orders from China and to obtain further ferry orders to add to the one that it is completing now.
I am not privy to those negotiations, nor am I presuming to say that the Government are or are not being helpful. I am making no criticism of or, for that matter, conferring praise on the Government. I should like the Minister to say that he recognises the importance of the orders, not only for the Govan yard but for merchant shipbuilding as a whole. He should give an assurance that British shipyards will not lose out on these and other orders because of a lack of adequate credit terms.
I mention the FSK 20/20 fleet support ship against the background of Govan shipyard. Its last order is the P and O ferry, which is due for launch in the autumn and for delivery in March 1987. After that, there in nothing on the order book. It is a tribute not only to the management but to the men at the yard that they have pledged themselves to meet the delivery dates although they are working themselves out of a job. I am sure that those pledges will be fulfilled. We desperately need another order, and although the FSK would not come within a time scale that would solve the immediate problem, it would be a considerable help to Govan shipbuilders and others.
Partly for reasons of time, and partly because of the merits of the matter, I do not wish to discuss the decision made last week between Harland and Wolff and Swan Hunter. Nor do I wish to suggest that the FSK is a straight substitute for the AOR as a fleet support vessel. It is not. One order has been given for the AOR, and the second will go to Swan Hunter if proper terms can be negotiated. I am looking beyond that. It is not clear to me, nor has it been made clear in the defence White Paper or in anything that the Secretary of State for Defence has said, why subsequent orders for fleet support vessels should have the many weapons and other defence equipment that are included in the AOR. I do not understand the defence justification, apart from anything else, for the Ministry's line. The figure quoted in newspapers for the AOR is £130 million. The FSK, which would do the job more than adequately without the weapons system involved, is being quoted by British Shipbuilders at £65 million to £75 million, which is almost half the price of the AOR.
I do not wish to compete, certainly not with my hon. Friends who are interested in the AOR, but there is a case for the FSK and I object to the fact that that case is not being properly considered by the Ministry of Defence. I hope that the Department of Trade and Industry will ensure that the case is properly considered by the Ministry of Defence. Unless it is, the chances of obtaining orders from foreign navies will be considerably reduced. This is an opportunity for the Government directly to underwrite the British merchant shipbuilding industry. I hope that they will take that opportunity and press the Ministry of Defence, as some Labour Members have already done, to consider positively the FSK 20/20. If they cannot give an undertaking to order the ship within the next year or two, will they at least express a genuine interest in it and ensure that it is considered as an alternative for the replacement of the Royal Naval Auxiliary fleet, which is aging and must be replaced in any case?

Mr. Anthony Nelson: The right hon. Member for Glasgow, Govan (Mr. Milian) spoke with considerable experience and a strong constituency interest which is respected by hon. Members on both sides of the House. He has spoken previously about the need for support for the shipbuilding industry as part of a wider industrial strategy that he propounds, and he has always spoken with moderation and persuasion. At least some of his remarks will be taken on board by my hon. Friends at the Department of Trade and Industry. I could not agree with every aspect, but on finance, on which I hope to say a word in a moment, I share many of his sentiments.
Whether we represent shipbuilding constituencies or not, we all have a national interest in the survival and prosperity of this most important industry. During the past decade or more, there has been a welcome bipartisan approach towards investment in the shipbuilding industry, reflected largely by the significant investment of public dividend capital and in debt finance by successive Governments in what is now called British Shipbuilders and in the many companies that comprised that nationalised concern.
About £1 billion of public dividend capital has been invested by the Government, forming part of the £1·5 billion of total capital support, yet sadly this was during a period when British Shipbuilders lost an accumulated sum of about £650 million. It appears that the provision of capital, whether to write off losses or through "soft" state funding by public dividend capital, has not been sufficient to halt the decline of this great industry or to fit it to take advantage of future opportunities. I wish to suggest modestly one or two ways in which we should help the industry to alleviate some of its problems.
Despite the despondent tone of much of the debate so far, there is reason to believe, nationally and internationally, that the shipbuilding industry can perhaps look forward to rather better times. None of us has an interest in trying to talk down the prospects of the industry or talk down the prospects for the market, unless there are demonstrable and immediately viable means of dissuading people. There are better prospects for world shipbuilding—first, because of the fall in the price of oil, which will be a circular trend. Although it may not maintain its low price, it will probably trade at lower real prices than it has historically.
This will have two major advantages. First, it should increase the traffic of oil internationally, and oil comprises a significant part of maritime trade; secondly, oil as a constituent cost of transport will be significantly reduced. When we recall that a major reason for the decline in shipping internationally and, therefore, to a large extent, in shipbuilding, was the rapid and large increase in the price of oil, it is not unreasonable to expect that a converse movement might engender some revival.
Secondly, there are better prospects because the fall in interest costs nationally and internationally should create not only a more viable world economy in which transport, including ships, may be ordered, but greater economic activity in those countries and lower costs of financing which will make new orders more viable. I believe—although it is more speculation than prophesy—that the price of commodities internationally, which is exceedingly low, will increase. I do not know whether it will move up rapidly, but the demand for international commodities of

all sorts—minerals and foodstuffs—will rise. These form a significant part of the cargo markets and might be expected to bring about a revival in "world scale" charter rates and, after a revival in the charter of older shipping, a revival in demand for new cargo and general vessels.
As many hon. Members have said, there has been a fall in Europe in capacity for shipbuilding and there has also been a fall in Japan and elsewhere. This fall in capacity, combined with the much more streamlined and technologically efficient shipyards that are currently competing against each other, will provide a firmer basis on which to attract new orders. When one looks at some of the major customers for ships and sees the extent to which new build forms a large proportion of their fleets, one can say with a little confidence that there are better prospects for the future.
One of the largest shipping companies in the world is the Worldwide Shipping Company which is registered in Hong Kong. The majority of its shipping fleet is less than five years old. The fleet owned by that company is bigger than the whole of the British merchant shipping fleet. If one takes that into account and assesses the extent to which such companies will look to international shipbuilders to replace their fleets, it is clear that there will be a demand for new build. Our aim must be to go out with renewed vigour and perhaps more imagination, with Government and industry working hand in hand more closely than hitherto to try to get a share of that cake.
With great modesty, I should like to suggest five ways in which we might move forward. I hope they will commend themselves to my hon. Friend and to hon. Members. The first and I am sure the single most important factor that will assist the revival, continuity and survival of the industry is ship finance. That is the key. Whatever we may say about labour practices, quality, dates of delivery, heritage and so on—important as they all are—when one comes down to it, it is the cost and the extent to which purchasers, including Governments, are accountable to others for the purchases they make that are important. Customers should be able to undertake purchases at the lowest competitive levels of finance.
The lower interest rates currently prevailing provide a welcome opportunity. On previous occasions I have argued for them to be lowered even more and for the Government, as far as they can, to influence the rates in this direction. That is the single most important factor that will create a more competitive opportunity for British Shipbuilders. We should look more pragmatically and imaginatively at the way in which British Shipbuilders tenders for orders. It should consider the extent to which it is allowed, within the rules of the game, to front-end load the interest costs within the price of a ship as opposed to the extent to which it costs the ship quite separately from the interest. In Britain, tendering is done honourably and correctly, but some other countries are far more inclined to offer an exceedingly low rate of interest, whereas the real interest cost is to a large extent absorbed within the capital price that is tendered for the ship.
The home purchase scheme and preferential interest rates through ship mortgage finance have been helpful, as has the aid and trade provision, in providing low-cost ship finance. Although it is on the fringes of this matter, we should look imaginatively at barter deals. Such deals, especially given the movement of oil in recent years, provide a tripartite opportunity—as do all barter deals


between countries—to British Shipbuilders to get orders at viable prices, but the liability against a fall in the value of the commodities bartered is shared by others.
It is essential that we have competitive and more stable rates of exchange that will enable us to tender internationally. As a small part of such a policy we should be members of the European monetary system. We should be able to tender in foreign currencies with a guarantee by the Britsh Government that any variation from the exchange rate basis on which a tender is made will be met by Government. I should like my hon. Friend to explore ways in which this can be done within GATT and other rules.
Public sector orders, about which something has been said, should be far more related in future than they have been in the past to the export potential of the ships. The warship sector is a prime example. Under successive Governments, the types of ship ordered by the Royal Navy have not been suitable for export markets. In the merchant sector, the success some years ago of the SD14 as an off-the-shelf ship is an example of the way in which we should be buying ships in the public sector that have export potential.
Although my hon. Friend said that British Shipbuilders is specialising much more than it has done in the past, there are dangers in specialising in the offshore oil industry; those dangers arise because of the reasons I enunciated earlier. Although British Shipbuilders should concentrate in a specialised sector of the market, in future it should also emphasise its capability in other technological sectors not involving energy or offshore exploration.
The marketing policy of British Shipbuilders should be much more imaginative than it has been in the past. I should like to quote one example, and here I declare an interest. One of the companies that I advise is seeking to assist a middle eastern country in the development of its fisheries industry. To that end I contacted Ferguson-Ailsa to obtain information about its capability in that field. The company sent a brochure about the ships it builds. I had no further communication from the company about the inquiry, but I have been bombarded for months by Nordic interests which have this very day sent a delegation to the countries concerned to explore the opportunities. The Nordic export project fund is state and industry-financed in Scandinavia and is out to get business not only for its shipbuilding industry but for its engineering and manufacturing industries. It acts as a vanguard for many export companies.
The Department of Trade and Industry and British Shipbuilders should renew their efforts to follow up inquiries for projects abroad and inquiries about ways in which they can work with others in turnkey projects to assist in the provision of vessels. In these and in other ways, but most of all in the provision of preferential finance, much can be done to ensure that British Shipbuilders takes better advantage of any future upturn than it has done in the past. To the extent that the Bill provides it with the wherewithal, I welcome this primary legislation and the terms in which my hon. Friend moved the Second Reading.

Mr. Michael Meadowcroft: Like the hon. Member for Chichester (Mr. Nelson), I do not represent a shipbuilding constituency but I share his belief

that the progress and development of shipbuilding is important to the whole of Britain. I listened with interest to his rather optimistic views about the potential for shipbuilding, but in his speech I failed to detect a sense of the urgency of the matter. Unless there is some sign that his optimism is to be quickly justified, there will not be the capacity to pick up the orders when they are available.
Like other hon. Members, I have no wish to oppose the increased capital finance that the Bill will make available. I should like to encourage a greater ability to invest in other spheres of service and industry where it is within the Government's power to do so. It seems a shame that we look at minor details and minor areas rather than at the whole area of Government spending. Set against the background of decisions in shipbuilding, which at best puzzle and at worst embitter those involved, it is important to appreciate the problems of people who are struggling to survive in the industry.
The borrowing powers for British Shipbuilders need to be increased in the context of fair treatment rather than in the context of backing up the myth that there is free and open competition in the industry. If warship operations are rather more profitable than merchant shipbuilding, it is important to realise that it is essentially orders from Governments that provide that extra profit, and there is no point in trying to represent that as fair and free private competition. It would have been far more acceptable to me and my hon. Friends if at the same time as introducing the Bill to increase the borrowing powers of British Shipbuilders the Minister had been able to announce an earlier start date for the next AOR vessel and a definite offer to Swan Hunter. Even more acceptable would have been an announcement that an order for a type 23 frigate was to be placed with Swan Hunter.

Mr. Nicholas Brown: The hon. Gentleman has referred to the AOR vessel, which, strictly speaking, goes outside the bounds of the Bill. However, will he explain what Liberal party policy is on the issue?

Mr. Meadowcroft: It was made clear last week by the Liberal spokesman that the order for the next AOR vessel should be placed on Tyneside, and that the order should be accelerated.
I do not know whether this is associated with lack of capital, but it appears that British Shipbuilders has got rid of its computing capacity by passing it over to Hoskins, which has declared redundancies. Some of those who have been made redundant will not have the rights that would have accrued to them if they had stayed with British Shipbuilders. This might be a small matter, but it is important to those who are involved. The capacity to maintain cash flow should be examined.
I hope that the Minister will dispel the fear that increased capital capacity is being made available so that certain sections of the shipbuilding industry can be fattened up for privatisation. Against the backround of fairly general acceptance of what the Bill seeks to do, I hope that the Minister will give the House an assurance that investment is not taking place with a view to selling off sectors of the industry in future.

Mr. Michael Fallon: The presence in the Chamber of five Members from the north-east bears


witness to the importance of shipbuilding for Tyneside, Teesside and Wearside. There is no better illustration of the Government's industrial policy than the Bill. It is modest in size but it will be huge in cost. The Bill is a good example of the Government's pragmatism and of the dogmatic empiricism which seems to envelop the Department of Trade and Industry these days.
Ministerial support is to be extended again and Exchequer subsidy is to be increased. When the Bill is fully implemented, the borrowing limit of British Shipbuilders will have been raised five times in four years during this Parliament. The 1979 and 1981 measures raised the borrowing limit five times in the four years between 1979 and 1983. The Government started with a borrowing limit of about £200 million and we are now approaching a borrowing limit of £1,400 million. As my hon. Friend the Minister has said, progress has been made. British Shipbuilders has been streamlined and its management continues to be improved to stem the huge financial losses that BS suffered in the late 1970s and early 1980s and belatedly to improve productivity and working practices, which require improvement throughout the industry.
Since the last major debate on a Bill of this sort, which took place in November 1984, and in which I was fortunate enough to participate, streamlining has taken place. Warship and other yards have gone, including Brooke Marine, Yarrow, Vosper Thornycroft, Hall Russell, Vickers and Swan Hunter. I believe that British Shipbuilders is in better shape now than it was. Parts of it have been released to the private sector and the losses involved in running the corporation have been reduced. It is to the credit of the Government that that has been achieved against a grim and deteriorating international background. It is to the credit also of the retiring chairman of British Shipbuilders, Graham Day. We should put on record the debt that the industry and the Government owe to Graham Day for the work that he has done.
I hope that my hon. Friend the Minister will agree that we are a long way from the heady days of 1979 when his predecessor's predecessor was quoted as saying:
We are prepared to put public funds, for a two-year period, behind the industry's own efforts to achieve viability."—[Official Report, 23 July 1979; Vol. 971, c. 43.]
We are even a long way from July 1983, when my hon. Friend's predecessor told the House:
We cannot afford to go on subsidising shipbuilding with these losses."—[Official Report, 28 July; Vol. 46, c. 1356.]
When my hon. Friend replies, I hope that the will give us a clearer glimpse of the medium and longer-term prospects than he was able to do in his necessarily short speech on moving the Second Reading. The taxpayer at least would like to know whether the end of these losses is in sight.
It would be wrong not to say something about last week's announcement about the AOR order, which is relevant to the Bill. My hon. Friend the Minister will know that the Government's decision, sensible as it appeared in London, was disappointing to those on Tyneside. However, there are lessons that Tyneside can learn from the decision. It must recognise that it must be preferable when it comes to price and design. If the tender from Harland and Wolff was as competitive as it was made out to be, a couple of questions at least deserve to be answered. Is warship procurement based on the old

principle of Buggins' turn? Will the various Departments that are involved in procurement policy genuinely evaluate on a competitive basis the bids that they receive?
Secondly, what is the implication for a yard such as Harland and Wolff and the other yards that are covered by the Bill that still receive public funds? I asked last week whether, if the bid was as competitive as it was made out to be, my hon. Friend the Minister had any plans to privatise Harland and Wolff. I did not get an answer to that question, nor did I receive an answer to a question which I put before Easter, in which I observed that the subsidy for industry and employment in Northern Ireland is about 404 per cent. higher per head than that for England. I think that we deserve answers to these questions.
The Government can be accused of many things, and my hon. Friend the Minister may or may not have been right in his forecasts and his description of the state of the industry. He may well be open to criticism from Opposition Members about the pace and evenness of the privatisation programme. In this debate, however, he cannot be accused of a failure to support British Shipbuilders. A total of £1·5 billion has been committed since 1979. That is a massive investment by the long-suffering taxpayer. It is no fault of the Government that it is not yet clear exactly how much of a return we are likely to see on it.

Mr. Ted Garrett: It is my misfortune in life always to speak in debates on the problems of industry. I look forward to the day when I can speak about industrial and commercial problems with a success story behind us. During the years that I have represented my constituency I have had to talk about decline in the coal, machine tool, steel, fishing and civil engineering industries.
I am by nature an optimist but I am only now starting to recover from the bitter disappointment of Swan Hunter not obtaining the AOR contract, which was awarded to Harland and Wolff. Despite all the words that have been uttered and all the words that have been put into print, the people of Tyneside still feel a sense of bitter resentment. They are still unconvinced that the decision was not political because they have not had any figures to convince them otherwise that the order was gained by Harland and Wolff on a purely commercial basis. I should like the Minister for Trade to give us the figures to show the true realisation of the price difference. I doubt whether the independent accountants had the time to go into the subsidy question or to produce the accurate figures that are alleged to have been the decisive factor.
My memory of shipbuilding goes back many years. Even when I was a young man in the union, I was dealing with shipbuilding matters. In the Aircraft and Shipbuilding Industries Act 1977, some of us from the trade union side rather naively thought that we were doing Harland and Wolff a favour by wanting to incorporate it under the British shipbuilding flag. We were politely told by the then Government that Harland and Wolff would be better left out of the Act because it would receive higher grants and allowances. Later on, in some quiet manner, Harland and Wolff came under the Act, and so could receive subsidies.
Harland and Wolff has two forms of subsidy. I deny any bias when I say that the managing director of Harland and Wolff, whom I consider to be an astute man, a good shipbuilder and a man respected in British Shipbuilders,


has put a deal together in which he has blended both the subsidies to get the correct figure. He will deny this, but underneath it all there remains the argument, given to me by senior management and independent people not employed in the shipbuilding industry, that it was physically impossible for the alleged £5 million difference to be on a strict commercial basis.
I congratulate my hon. Friends and Conservative Members on the way in which they have fought for Swan Hunter. It was a long and bitter campaign. Oddly enough, I also wish to congratulate the Department of Trade and Industry. It was a slow starter in seeing the nature of the problem, but when it had grasped it, it fought for its corner, although it could not win. The odds were against it in Cabinet, in Cabinet Committees and in ministerial committees. It was against the Minister of Defence, the Secretary of State for Scotland and, some would say, the Prime Minister. I have my doubts about that. I think that on this occasion she was in a minority. That is purely my instinct. I am not privy to her inner thoughts, and I doubt whether I ever shall be. However, to be fair, she listened carefully and intently to my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) and me. I am fully convinced that she did not understand the full nature of the problem until that meeting, but she carried out some rethinking of policy after it.
We cannot carry on being bitter and negative about what has happened. As has already been said, we must do something even at this black moment for British Shipbuilders. I do not believe that the industry will disappear. I do not think that that is the Government's will. However, I wish that some more initiative and imagination were shown. I am not blaming only the Government—past Governments have been responsible for the lack of the imagination that this country, as a maritime nation, should be adopting. We let passenger liner business go out at the time when the signs were that passenger liner business was increasing. It is now a booming business, but we are out of the industry. We should have a more strategic plan for our defence programme. It cannot go on in stops and starts and booms and slumps. If we have a truly national defence programme, orders should balance out better.
I still believe in the British shipbuilding industry and I believe that we can remain a maritime nation, but the imagination must come from a variety of sources. It must come from confidence in the industry and in the shipowners, and, above all, from the confidence of this place. It is here in the House of Commons that such confidence should start, and it must start now.

Mr. Bob Clay: One of the extraordinary things about this debate is that a similar debate may not be held next year, as many hon. Members have already said. We are facing the possibility of the end of merchant shipbuilding in this country by the end of this year or early next year. The Minister was remarkably complacent about that. I bitterly resent one or two, but not all, of the Conservative speeches about the Government pouring money into British shipbuilding. Let me put the record straight, using the same calculations as those used by the Minister about aggregating public money upwards since 1979. He talked about £1,449 million going to British shipbuilding. However, Ministry of Agriculture subsidies for the farming industry are at £5,538 million. Until the Government take account of that, we should not

hear anything about over-generosity towards shipbuilding. The Government have to decide whether they want a British shipbuilding industry.
The Government have orders within their gift. Ii was amazing to hear the Prime Minister explain to me and to trade union colleagues on Friday morning that the irradiated fuel vessel order had gone to Japan because much of the trade that will be carried by the vessel is Japanese—in my view, that is Japan dumping its waste on this country, but nevertheless orders are orders. It seems extraordinary that the Japanese Government can not only oblige its shipowners to buy Japanese but can oblige British shipowners to buy Japanese if they want to trade with Japan. If the Government took a lesson out of the Japanese book, we should not be discussing these problems tonight.
My right hon. Friend the Member for Glasgow, Govan (Mr. Milian) has already spoken about the FSK20/20. There was a surprising lack of understanding, which is now on the record, between the Department of Trade and Industry and the Ministry of Defence. It is clear that British Shipbuilders and the Admiralty had some misunderstanding about the vessel. It is incredible that British Shipbuilders was allowed to spend £250,000 on research and development and that people from the Admiralty went in and out talking about fine detail, only for the Government to say that they did not want the ship.
It is extraordinary how the Department of Trade and Industry does not seem to have impressed on the Ministry of Defence the significant effect on export orders and other factors that the development of this ship could have. The new corporate plan for British Shipbuilders saw the FSK as something central, and it will now have to be rewritten. It is tragic that the Department of Trade and Industry did not explain long ago to the Ministry of Defence the significance of the ship.
The Government should now do something about soft credit. Neither I nor my colleagues who were with me on Friday morning have any doubt that the Prime Minister said that the Government had looked at this and would take a different attitude. I have no doubt that she said specifically that, with the exception of Japan, from now on, orders would not be lost to this country because of inadequate credit arrangements. The words "soft loans" and other such terms were used.
It is no good the Government saying that that is not a change of policy. One can point to specific orders from Ethiopia, Yugoslavia and other countries which have been lost by British Shipbuilders during the past couple of years simply because of the credit package. The intervention fund is important, but we know that even if the total base price is lower, if another country offers better credit facilities, such as a moratorium on payments, lower interest rates, or longer repayment periods, Third world countries in particular will place their orders with it. We have lost orders because of that.
If the Government would do what the Prime Minister clearly undertook to do on Friday morning, with the exception of Japan, which is to be prepared to offer credit packages to undercut all competition, it would be possible to place orders in British yards. It should also be possible to force British shipowners to place orders with British yards. We hear a great deal of talk about the world recession, but if all the orders placed by British shipowners


last year had been placed in British shipyards, they would have more than filled the capacity of British yards, despite the world recession.
I should like the Minister when he replies to answer my question about intervention fund money. In an intervention in the speech of my right hon. Friend the Member for Glasgow, Govan (Mr. Millan), he said that so far British Shipbuilders has not asked for any special arrangements. I have heard that before, and if it is the case, what is he doing about it? It seems incredible that we have been losing orders because of finance, yet he says that British Shipbuilders has never asked the Government to apply special arrangements. We should not have been praising Graham Day tonight, but damning the man for the butcher that he was. If he or his successor are so incompetent that they have never knocked on the door of special arrangements at the Department of Trade and Industry, it is they who should have been sacked long ago, instead of the thousands in the industry who have been dismissed. Why have they not considered the special arrangements that the Government offer?
I know that people are worried about many areas, but I make no apology for spelling out to the Government the wider context. British Shipbuilders provides 3,100 jobs in my constituency in Sunderland. No one disputes that every job in the industry supports three outside it. Twelve thousand jobs in the area are already at stake. Male unemployment is already running at 45 per cent., 50 per cent. and 55 per cent. in large areas around the river. The loss of those jobs, even on the Government's calculations, which are a fiddle, would cost the Government £72 million a year. That is the cost to the Government in Sunderland alone by the closure of Sunderland Shipbuilders and Austin and Pickersgill. That does not include the human cost of misery and despair, and the decay of the town.
Little time remains, and orders must be placed in both yards within the next few weeks. When the Prime Minister named the Stena Seawell on Friday, she praised the management and the work force. She said that the whole of Britain could be proud of the achievement in Sunderland, and what a marvellous yard it was. In the past she said the same about the Austin and Pickersgill yard. We shall remember those words, and expect that if she takes time to come to the north-east and praise the yards, her next step will be to find orders for them so that they will not close by the end of this year.

Mr. Don Dixon: I remind my hon. Friend the Member for Sunderland, North (Mr. Clay) that the Prime Minister has on a number of occasions praised the National Health Service, yet we all know what she has done to it. The explanatory and financial memorandum states:
The Bill will have no effect on public service manpower.
That is because there is little public sector manpower left in the shipbuilding industry. When the shipbuilding industry was nationalised in 1977, there were almost 83,000 employees, but this year there are fewer than 10,000. Therefore, I understand why that was stated.
The Minister said that British Shipbuilders had received £235 million in intervention funding and £177 million for redundancies. I assume that most of the other money that it has received has been invested in the warship building yards, which have been sold to the private sector.
I am sorry that the hon. Member for Darlington (Mr. Fallon) has left the Chamber. In a previous debate he referred to Redheads shipyard, which is in the constituency of my hon. Friend the Member for South Shields (Dr. Clark). He stated:
Redheads in particular is more than simply a commercial success. I hope that all hon. Members would wish it to be a commercial success in a hostile ship repair environment. It is also a shining example to the rest of the industry, not simply the repair industry, of the much more flexible approach that is required in working practices, entrepreneurship and by going out across the continent of Europe to market one's product."—[Official Report, 27 November 1984; Vol. 68, c. 862.]
Redheads ship repairers, in which many workers invested their redundancy pay, is now bankrupt. Those workers have lost both their redundancy pay and their jobs. That shows the effect of privatisation.

Dr. David Clark: The House will recollect that on many occasions I was attacked across the Chamber for advising those workers not to put their hard-earned money into that foolhardy venture. My hon. Friend will recollect that those men were encouraged actively to do that by the Conservative party, the hon. Member for Darlington (Mr. Fallon), and, indeed, the then Minister of State, Department of Trade and Industry the hon. Member for Kingston-upon-Thames (Mr. Lamont), who opened the yard. Does my hon. Friend agree that, as the matter is still sub judice, there should be a committee of inquiry into the events surrounding the establishment and collapse of that company?

Mr. Dixon: I certainly agree with my hon. Friend. Many of those men are particularly worried by the lack of information they received about the company going bankrupt.
We shall not oppose the Bill. It has often been said that nobody wants to shoot a one-legged Father Christmas. At least this debate gives us an opportunity to discuss the many major problems facing the British shipbuilding industry today, and the men who have invested their lives in it. The Government should present a more positive approach in these days of crisis for the industry.
The relationship between British shipowners and the industry is vital in terms of the need for home orders. British shipyards have been largely dependent on home owners in the post-war period. Unfortunately, the number of orders placed by British owners in British yards has declined considerably since the early 1960s. Between 1962 and 1966 an average of 67 per cent. of tonnage was home produced. Between 1967 and 1971 that figure collapsed to 32 per cent., and between 1972 and 1976 a mere 28 per cent. of British tonnage was built in British yards. Indeed, the Booz-Allen report, which was published in 1973, found few established links between British owners and British builders. That is in stark contrast to Japan where there is a close link between owners, builders, banks and the Government. Not one domestic order has been placed outside Japan since 1947. Everyone knows that Korea builds cheaper ships than Japan, yet Japanese shipowners always build their ships in domestic yards. It is a pity that British shipowners do not follow the same policy.
The General Council of British Shipping has made some proposals to the Secretary of State regarding the Budget debate. One suggestion is that there should be roll-over relief for balancing charges. That would enable funds from the disposal of a ship to be set off against the cost


of a replacement vessel which would encourage shipowners to build more ships, hopefully, in British yards. When the Minister meets his European colleagues, I hope that he will discuss the scrap and build scheme. European community countries have debated that since 1977, but nothing has happened. To create orders to keep a viable shipbuilding industry in Britain, it is imperative to have a scrap and build scheme, even if it is conducted unilaterally.
The state of the industry report, which was published in February this year by British Shipbuilders, was a doom and gloom report. It pointed out that the target for 1985–86 was 203,000 compensated gross tonnage, but, by the end of January British Shipbuilders had secured only 18,000 CGT, which was less than 9 per cent. of the target, and expected to achieve 70,000 CGT. However, as the Minister has pointed out, it did not achieve that tonnage.
My right hon. and hon. Friends have referred to other parts of the British shipbuilding industry. That makes dismal reading, but I do not want to go into it because of the time constraints. Last delivery dates are as follows: Austin and Pickersgill, November 1986; Govan, March 1987; Smith's Dock, December 1986; Sunderland Shipbuilders, February 1987; Appledore, March 1987; Ferguson-Ailsa in Port Glasgow, May 1986; Ferguson-Ailsa in Troon, September 1986; and Clark Kincaid, October 1987. The comments of my hon. Friend the Member for Sunderland, North are true. Unless the Government take immediate steps to help the industry, there will be no shipbuilding debate this time next year, because there will be no shipbuilding industry.
The trade unions have made enormous sacrificies in tackling the shipbuilding industry's problems. Thousands of jobs have been axed and the remaining workers have faced periods of great insecurity. Bitterness and disillusionment shroud the industry. Most of the yards to which we are referring and which are shedding labour are in areas of high unemployment.
I should like to refer to Swan Hunter, although I appreciate that the Bill has nothing to do with naval works. My hon. Friend the Member for Wallsend (Mr. Garrett) has mentioned that yard, and I have no doubt that my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) will do the same, if he catches your eye, Mr. Speaker. Therefore, I do not want to dwell too long on it. The argument on placing the AOR orders—the Harland and Wolff design has been accepted—shows how resources can be wasted if the shipbuilding industry is split up. Swan Hunter's design team of 420 which is designing the AORs and Harland and Wolff's design team which is working for the Ministry of Defence are working against each other. That is what happens when the industry is split up. Swan Hunter has a first-class team, but unfortunately, because of the wastage of resources, it will have to go.
I have a letter from the Ministry of Defence referring to orders for the third, fourth and fifth of the type 23. An article this morning in the Financial Times refers to a cut in the defence budget of £3 billion over the next three years. The article states:
However, a prime target for cuts will be the Navy's shipbuilding programme, which seems certain to fall short of the Government's stated target of three new warship orders a year. This will mean delays to the new Type 23 frigate, as well as, possibly, to the building of conventionally powered submarines.

Swan Hunter has not only lost the order for the AORs but stands little chance of getting the order for the type 23 frigate if the Government carry out their cuts in the defence programme.
The men at Swan Hunter were led up the garden path. Every worker received a copy of the document issued by the management when it was considering a buy-out. It states:
This morning a meeting took place at which the team negotiating for the purchase of the company met trade union representatives from all groups of employees, including fulltime officials, for the purpose of announcing their intentions for the company.
To set aside your concerns and worries about future prospects and job security, we can confirm the following statement was made:—
All existing employees will be kept on.
No sooner had the management buy-out taken place than it was talking about a crisis and possibly closing if the orders were not received. People in the shipbuilding industry have faced that problem for a considerable time. Since 1979 when the Conservative party was elected to government, there has been insecurity, redundancies and closure of yards. Unless the Government do something about that, Britain will be the only maritime nation that does not have a shipbuilding or ship repairing capability to service our fleets. I hope that the Minister, when he stops talking to the Government Whip, will take some notice of the shipbuilding industry and the suggestions of my right hon. and hon. Friends. Much more could be said about the industry, but I shall conclude to allow my hon. Friends time to speak.

Several Hon. Members: rose—

Mr. Speaker: Order. I remind hon. Members that the first of the Front-Bench speakers will seek to rise at 6·40 pm. I hope that the Minister and the spokesman for the Opposition will have time to speak in that time.

Dr. Norman A. Godman: I shall take your words on board, Mr. Speaker.
It is always of considerable regret when British maritime interests place orders for vessels in south-east Asia. I recall the Scottish shipping line, the Berm Line, placing an order with Daewoo of South Korea for a bulk carrier and a semi-submersible rig. About 18 months ago, Trinity House ordered a lighthouse from south-east Asia. Such orders reflect what the annual report of Lloyd's Register of Shipping called the "unassailable" position occupied by south-east Asian shipbuilding nations.
I support the comments of my right hon. Friend the Member for Glasgow, Govan (Mr. Milian) on the intervention fund. The fund must be used flexibly and imaginatively. I was pleased to hear the Minister's intervention. We need a domestic scrap-and-build programme. I have argued in the House and elsewhere that if we want a motto it should be, "Build British and sail British."
Because we now have a single company, North-Eastern Shipbuilders, in north-east England, I wonder whether the board of British Shipbuilders has similar plans for its yards, and Clark Kincaid on Clydeside.
The debate takes place against the depressing backcloth of decline in the European shipbuilding industry. This dreich state is seen at its depressing worst on Clydeside. My constituency has been badly damaged by scandalously


high unemployment, with 26 per cent. male unemployment and more than 1,000 people out of work. The Government must act to halt the continuing decline in shipbuilding and in marine engineering.
I shall refer to constituency interests. I urge the House to ignore the remarks of the hon. Member for Chichester (Mr. Nelson) about Ferguson-Ailsa, a yard in my constituency. That yard has a first-class approach to marketing its skills and services. I resent ill-founded criticism of that yard, which is struggling mightily. Clark Kincaid, which is in my constituency and that of my hon. Friend the Member for Wallsend (Mr. Garrett), is the last marine engine builder of any size on the Clyde and the Tyne. Not long ago the company was praised by Cunard for the quality and delivery date of the engine built for the Atlantic Conveyor, which was to replace the vessel of that name sunk in the Falklands war. Clark Kincaid is building two small medium-speed land engines for the Cayman Islands and two marine engines—a Sulzer and a BW engine. It is crucial to maintain that marine engineering capacity.
The Minister mentioned Ferguson-Ailsa of Port Glasgow and Troon. He said that the yards were building several small vessels. I shall be slightly more accurate than that. At Port Glasgow the yard is completing the second of two anchor-handling vessels for the Canadian Arctic oil industry. The yard at Troon is shortly to finish the second of two offshore supply vessels for Seaforth Maritime. In addition, a research vessel for the Ministry of Agriculture, Fisheries and Food is being constructed. Those two yards—Port Glasgow and Troon—are under the FergusonAilsa title. They have some 700 employees. They are first-class specialist yards which are desperately short of orders. Clark Kincaid is a first-class outfit. It has excellent industrial relations and a high quality of work. I confidently expect Ferguson-Ailsa to win the order for a new fisheries protection vessel, which is to be placed soon by the Department of Agriculture and Fisheries for Scotland. That is in line with what was said by my right hon. Friend the Member for Glasgow, Govan (Mr. Milian). It is essential that the state, public utilities and public corporations place their orders with our yards. Once the fisheries protection vessel is launched, it will patrol the Scottish fishing grounds on behalf of the Department of Agriculture and Fisheries for Scotland.
In its recent report on fisheries protection the Select Committee on Scottish Affairs urged the Scottish Office to place the order with a Scottish yard. That yard should and must be Ferguson-Ailsa. It has designed the vessel, it built the previous vessel for the fisheries protection service and should build this one.
I shall make my final quick points as I am conscious that my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) wishes to speak.
This is an important issue in Scotland at the moment. Within the next 12 weeks Caledonian-MacBrayne will announce the placing of an order for a 1,000-passenger car ferry. It is to be used for the Hebridean islands service. I would like to say to Mr. Colin Patterson, the chief executive, and the board members of the Scottish Transport Group that that order must be placed with a Scottish yard. Again I say, declaring a constituency

interest, that that yard should be Ferguson-Ailsa. It has built vessels before for Caledonian-MacBrayne and it should be given this order.
It is essential, of course, that Ferguson-Ailsa submits a sensible and competitive tender and I have no doubt that it will do so. However, Mr. Patterson and his colleagues must remember that they are employed to provide a service for their Scottish customers— the people who travel among the islands and between the mainland and the islands. Those passengers and the overwhelming majority of Scots want the vessel to be built in a Scottish yard.
My final comment concerns Scott Lithgow, formerly owned by British Shipbuilders and now owned by Trafalgar House. It, too, is a yard which is grievously short of work. It now has a first-class industrial relations record with an excellent quality of work.
I am given to understand that the shipping company, ACL, plans, in the near future, to extend five of its vessels. Naturally, I sincerely hope that that work is carried out in the United Kingdom. I do not want to see the work go to West Germany where the QE2 is heading for its refit and re-engining. If the work for ACL is to be done in the United Kingdom, why not at Scott Lithgow? Trafalgar House has a major stake in ACL-25 per cent. of the equity I believe. On the basis of demanding work for British and Scottish yards, I urge Sir Nigel Broackes and his colleagues to recommend to ACL that the work be undertaken by Scott Lithgow. It is essential that British maritime interests place their orders with British yards. They are two sides of the same coin.

Mr. Nicholas Brown: I thank my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) for curtailing his speech so that I can make a short contribution.
I endorse the remarks made by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith). He said that the privatisation of the warship building yards was lunacy, because the profits from that could have made a contribution to the very matters we are discussing today. However, the Government would not get very fat on the £5 million that they apparently got for Swan Hunter when it was privatised. If the terms and conditions and full extent of the deal were so fair to the managers and owners of Swan Hunter, I ask the Minister whether his Department would be prepared to buy it back if the owners wished to sell it to them. Will he address that point in his reply?
The moneys referred to in the Bill cover the question of redundancy payments. The yards which have been privatised out of British Shipbuilders are no longer covered by the redundancy payments scheme. It was felt, of course, that they would not need redundancy payments because there was work for them to get. That is not turning out to be the case for Swan Hunter. The workers face the possibility of being made redundant on terms substantially less favourable than for those who accepted voluntary redundancy a year and two years ago. The responsibility is the Government's, not that of the private owners of the yard. Is the Minister willing to make any sort of financial contribution towards the relief of that set of circumstances that the Government have done so much to bring about?
Both Cammell Laird and Swan Hunter are mixed yards. They have been forced to become warship yards and have been promised work as well. Swan Hunter, at least, still


has an eye towards trying to obtain some merchant orders. In his introduction the Minister referred to intervention funding and to looking at individual work on a case-by-case basis. If Swan Hunter is to survive at all, I understand that there is an outside possibility of it still obtaining merchant work. Can we come to see the Minister and have its case discussed on a case-by-case basis? It is not taking work from any other shipyard; it is tendering for it because of its specialist nature. Is the Minister's door open to Swan Hunter, or will merchant orders be subsidised on a case-by-case basis for those yards that the Minister has designated as merchant yards and yards, such as Swan Hunter, which used to do merchant work, will be out of it altogether?
My hon. Friend the Member for Birkenhead (Mr. Field) referred to the special subsidy arrangements at Harland and Wolff, as did the hon. Member for Darlington (Mr. Fallon). They made the point that there are substantially more yards than work. Is it true that the subsidy arrangements mean that Harland and Wolff will always have a competitive edge and that it will always be there when mainland British merchant yards are struggling without the same financial support? How will the Minister allay that fear? How will he demonstrate to those who represent not only warship yards, such as those I represent, but those who represent merchant yards that somehow Harland and Wolff will not always have a competitive edge because it always has more subsidy than is provided for mainland Britain? That is certainly a real fear on Tyneside, and the Minister should allay it not just by assurances but by being able to demonstrate that there is no such subsidy.
Tyneside is not trying to take work from other communities. We just want to be treated fairly. We do not want the work that our community should have taken and put elsewhere. We feel that the AOR was taken for political reasons and placed in Belfast. The type 22 frigate went to Cammell Laird; it should have come to us. There was a £9 million cost for the British taxpayer. There was a promise of the type 23 frigate to make up for that, and that is now two years overdue.
If the Government are serious about seeing Swan Hunter and shipbuilding survive on the Tyne, the Minister, who has direct responsibility because he sold the yard into the private sector, should discuss with his right hon. Friend the Secretary of State for Defence when those promised orders will be committed and how the assurances that the Government have given to the people of Tyneside will be upheld. The suspicion on Tyneside is that those promises will not be upheld.

Mr. Gordon Brown: While, technically, the debate has been about the extension of British Shipbuilders' borrowing powers, it has also been, rightly and properly, about the contraction of the industry, the risk to jobs, the threat to established skills, and the fears and needs of the shipbuilding communities up and down the country. It has been about the problems of Sunderland, which were mentioned by my hon. Friend the Member for Sunderland, North (Mr. Clay). It has one of the highest unemployment rates in the country. The industry faces closure if no new orders are found before the end of the year. The skills of the workers were praised by the Prime Minister on Friday but now they face the prospect of closure and of a rundown of the industry if the

Government do nothing. The debate has also been about the problems of Govan and Greenock, where no new orders are yet available and where, additionally, jobs will be lost, and unemployment in an area of high unemployment will rise.
The debate has also been about the problems of the north-east. I congratulate my hon. Friends the Members for Newcastle upon Tyne, East (Mr. Brown), for Jarrow (Mr. Dixon) and for Wallsend (Mr. Garrett) on the campaign that they have mounted for orders for Swan Hunter. It seems remarkable that, when a yard is denationalised, orders and jobs dematerialise almost overnight. The Minister should tell us what his Department will do to persuade the Ministry of Defence to speed up the promised orders for type 23 and the second AOR so that jobs can be saved and retained at Swan Hunter in the north-east.
When we have already suffered a halving of the capacity of the shipbuilding industry over the past seven years, when, as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) said, 48,000 jobs have been lost throughout the shipbuilding and ship repairing industry, when we have only 2 per cent. of world orders for merchant shipbuilding at the moment, and when the retiring chairman of British Shipbuilders, who was praised by Conservative Members, has said clearly that the industry is facing a bare-knuckle fight for survival, and fears that the merchant shipbuilding industry could go exactly the same way as the motor cycle industry, the question is not the generalities raised by Conservative Members in their lengthy speeches, but what the Government are doing. The question is what they will do through their public purchasing powers, activities to secure proper intervention fund support, and the development of packages that can beat the rest of the world by ensuring the maintenance and continuation of our merchant fleet. What will the Government do to prevent a catastrophic rundown in the merchant shipping industry over the next year, and to prevent a decline that could lead to the disappearance of the industry as a whole?
Both sides of the House share a concern about the decline of the merchant shipping industry. It was 1,200 strong in 1979 and is only 600 strong today. The General Council of British Shipping fears that the figure could fall to 400 and then to 200 by 1995. When last week the Committee in another place called for urgent measures from the Government to secure orders for British yards and to ensure that the British merchant fleet could maintain and expand its capacity to deal not only with industrial but with defence needs, the question that the Minister must answer during the debate is: why has he not done more? What more will he do to persuade British shipowners to buy British, to repair British and, indeed, to sail British, in the interests of the industry?
There are three things that the Minister can do. The first is to use the Government's public purchasing powers to the benefit of shipbuilding communities. Surely it is in the Department's interest and, indeed, in other Department's interests, when faced with the prospect of ever-rising unemployment at great cost to the Government, to speed up the orders that have been mentioned by Opposition Members. Those orders are desperately needed by the various Departments, but, because of cash shortages, particularly in the Ministry of Defence, they are not being placed.
My right hon. Friend the Member for Glasgow, Govan (Mr. Millan) and my hon. Friend the Member for Sunderland, North mentioned the FSK 20/20. The Minister should clarify the position. The Ministry of Defence encouraged British Shipbuilders to design that; British Shipbuilders could build and export it. It is not a substitute but it is a complement to the AOR. The Minister should tell us what pressure he will bring to bear on the Ministry of Defence to ensure that those orders, which could help Sunderland and Govan retain jobs, are placed as soon as possible.
Secondly—the Minister raised this point—there should be effective pressure to secure proper support from the intervention fund. When the Under-Secretary spoke in a debate last year, he said that he was fighting for Britain in Europe. Over the next few months his proposal for 35 per cent. subvention became only just over 20 per cent. subvention under the intervention fund. This year's negotiations have started with the Commissioner for competition, who says that he wants an effective and significant reduction in the overall level of aid. The Under-Secretary, who appears to be leading the negotiations on behalf of the Government, is quoted as saying that he wants an
end to the nonsense of worldwide subsidies.
While not offering Britain as a sacrificial lamb, he has also said that Europe could take the lead in the process of ending the "buying" business for orders.
We should like the Minister to give us an assurance that he and his colleagues will fight for decent intervention fund support, that he will not be swept aside by the Commissioner for competition, that he will not yield to other countries that want a cut in intervention fund support, and that he agrees with us that we cannot afford the luxury of misplaced ideologies about free market forces—other countries are doing their best to protect their industries, while we seem to be mouthing monetarist orthodoxies in Europe.
Thirdly, the Government can take to heart what the Prime Minister seemed to be saying on Friday, which Downing street seemed to withdraw—that we need better packages to enable us to persuade people to buy British and build in British yards. The Prime Minister appeared to say that at the moment we could offer packages that were better than in any other country except Japan. That is contradicted by the evidence that the Department of Trade and Industry gave to the Committee in another place, when the officials appeared to be saying that other countries were able to beat us hands down, especially France and Germany, which could offer better and longer repayment periods and better credit packages for building ships.
The Under-Secretary appeared to say that other countries in Europe were offering hidden subsidies while our subsidies were all transparent and above board. If a study has not been done and if proposals have not been brought forward to improve the credit and loan packages on offer, the Minister could help by giving us an assurance that he will examine the packages and ways in which to improve them, take up the point that was made by my right hon. Friend the Member for Govan and guarantee to us that no order will be lost because the credit terms that are on offer in this country are detrimental compared with those offered by other countries.
We are talking about the survival or extinction of the merchant shipbuilding industry. We are talking not about an industry that is old-fashioned, but about an industry that has moved into high technology. This afternoon the Minister acknowledged the widespread gains in productivity that have been achieved—what he called the enormous strides forward. He also acknowledged the improvement in industrial relations. However, the Government need to match the commitment that has been made by the work forces throughout the country. What we need from the Government is a commitment to use their public purchasing powers to secure orders, to fight in Europe for an expansion of intervention fund support, to develop the packages that can be offered to secure the orders that Britain needs, and to ensure that British shipowners will buy British, sail British and repair British for the future of the industry.
What we need are not the complacent words that the Minister appeared to use at the beginning of the debate, but an assurance that dynamic initiatives will be taken to secure the future of the yards, to secure orders, to save the jobs and to safeguard the future of an industry that is vital not only for our industrial and trading needs but for the defence of this country.

Mr. Peter Morrison: In the short time that is available, I shall attempt to respond to what has been a very serious debate and pick up as many of the points as I possibly can.
If at the beginning of the debate I gave the hon. Member for Dunfermline, East (Mr. Brown) the impression that I was complacent, I assure him that that was not so. His right hon. and learned Friend the Member for Monklands, East (Mr. Smith) described the severity of the position, and I agree that it is very serious. I would not go so far as to use the words of the hon. Member for Dunfermline, East and say that it was a case of survival or extinction, but I am more than aware of the serious problems faced by the merchant shipbuilding industry in Britain.
I do not wish to detain the House with the debate about privatisation and whether that was a good or bad decision. The right hon. and learned Member for Monklands, East would expect me to defend the decision to privatise, and I do that with conviction. I believe that the employees in the Vickers consortium, 80 per cent. of whom took up the shares, would agree that privatisation was the most sensible way forward.
I should like to reiterate what I said at the beginning of the debate about the Government's commitment to the industry. If we had not been committed to the industry, we would not—at a time of scarce resources—have invested £1,440 million in the industry since we came to power in 1979. The Government have made a major commitment in that sense.
One of the main themes running through the debate, which was raised by the right hon. and learned Member for Monklands, East and by the hon. Member for Dunfermline, East, has been public sector purchasing policy. I agree that any responsible Government should have regard to that. I am sure, however, that the right hon. and learned Member for Monklands, East would accept that significant orders have been placed with the shipbuilding industry by the Ministry of Defence.
The right hon. and learned Gentleman also raised the point about the British Nuclear Fuels Ltd. ship. He will be


aware that the first four ships ordered by that consortium came from this country. The right hon. and learned Gentleman's point referred to the fifth ship, and the tender from the Japanese was substantially below the tender from British Shipbuilders. It is also fair to say, as the right hon. and learned Gentleman realises, that the company is not British dominated. It is Japanese-French as well as British.
The right hon. and learned Gentleman also raised a specific point about the FSK 20/20, as did many of his hon. Friends. I believe that is a good ship, and of course it is important for the future. It has export potential. I understand all those points. However, the Opposition will appreciate that the Secretary of State for Defence must look carefully at his precise needs. He cannot, off the top of his head, create orders in a way that the Opposition would like.
The right hon. and learned Member for Monklands, East raised the matter of the increase in intervention fund support. As I said when I intervened in the speech of the right hon. Member for Glasgow, Govan (Mr. Milian), we can consider support through the intervention fund on a case by case basis and there can be some flexibility.
The hon. Member for Sunderland, North (Mr. Clay) made the point with some vigour that it was surprising that British Shipbuilders had not come to the Government for support. That may be surprising, but so far as I know that has not happened because there has been no increase in the use of flexibility relating to the intervention fund. That is not a reason for no orders coming forward. I understand the passion with which the hon. Member for Sunderland, North puts his case, but, in all honesty, the position is not quite as he would like it to be.
Another of the themes running through the debate, which was raised by the right hon. Member for Govan among others, was the provision of credit. I appreciate that the competition in connection with the allocation of credit can become unfair or even more fair, and we must consider that position. There is the possibility of softer credit in certain circumstances using the aid and trade provision. I confirm that we are ready to consider the use of that provision in appropriate cases, and I can specifically confirm that, in the case referred to by the right hon. Member for Govan and his right hon. and learned Friend the Member for Monklands, East, we are ready to use it. We must judge each case on its merits.
I believe that a misunderstanding arose from the interpretation of the meeting between the hon. Member for Sunderland, North and shop stewards and my right hon. Friend the Prime Minister. I was not present at that meeting, but I have heard reports that it was very constructive on both sides. I am sure that the shop stewards appreciate that the Government and the Prime Minister are doing everything within their power to help British Shipbuilders and will therefore help with the jobs that are available.

Mr. Clay: In fairness to the shop stewards and to myself, the Minister should not mislead the House by implying that we thought that the Prime Minister was doing everything in her power. As the Minister has allowed me to intervene, may I say that my recollection of the meeting and that of the shop stewards is clear. The Prime Minister was not simply talking about one situation. She said that from now on no country, other than Japan, can undercut this country on credit in connection with orders.

Mr. Morrison: As I have said, I was not at the meeting but I did receive reports. I have related to the hon. Gentleman the present position for credits under the aid and trade provisions.
My hon. Friend the Member for Teignbridge (Mr. Nicholls) referred to the right hon. Member for Manchester, Gorton (Mr. Kaufman) and to a former Secretary of State, Mr. Eric Varley, and what they said about the industry in the 1970s. They had to deal at that stage, as did the then Government, with a very difficult situation. As the hon. Member for Wallsend (Mr. Garrett) said, the problems with the industry should he dealt with on a broad rather than a party political front. I believe that that has been the tone of the debate so far, and I agree that that is the approach that we should take.

Mr. Gordon Brown: Before the Minister leaves the point about credit packages, whatever the Prime Minister said, will he give us an undertaking that no other country will be able to undercut us on credit terms and that he will ensure that British Shipbuilders can offer the best credit terms?

Mr. Morrison: The hon. Gentleman is asking the impossible.

Mr. Gordon Brown: No, I am not.

Mr. Morrison: With due respect, the hon. Gentleman is asking the impossible. How am Ito know precisely what other countries may be offering by way of credit? The right hon. and learned Member for Monklands, East, who has been a senior Secretary of State, knows perfectly well that it is not always possible to know about credit terms as negotiations are commercially confidential. It would be impossible for me to give such an undertaking to the hon. Member for Dunfermline, East or to the right hon. and learned Member for Monklands, East without misleading them and the House.
My hon. Friend the Member for Teignbridge referred to the previous Labour Administration who said how difficult it was for people to manage the shipbuilding industry in western Europe and throughout the world because of the contraction of the industry. Of course, shipbuilding is extremely important to certain parts of the country, to the north-east and parts of Scotland in particular. I therefore understand why the Opposition make the point with conviction that the Government should force British shipowners to buy British ships. I cannot acquiesce to that request. It is fair to say that in recent years two thirds of British ships bought by British shipowners have come from British shipyards. Obviously, we shall do what we can to sell to Britain's shipowners the ideas of British Shipbuilders.
I commend the Bill to the House. I am sure that it is a further step in helping British Shipbuilders in the direction that it should be going.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Archie Hamilton.]

Committee tomorrow.

Orders of the Day — BRITISH SHIPBUILDERS (BORROWING POWERS) BILL [MONEY]

Queen's Recommendation having been signified—

Resolved,


That, for the purposes of any Act resulting from the British Shipbuilders (Borrowing Powers) Bill (`the Act'), it is expedient to authorize—

(a) any increase in the sums payable out of the National Loans Fund, the Consolidated Fund or money provided by Parliament under the Aircraft and Shipbuilding Industries Act 1977 which is attributable to provisions of the Act raising to £1,300 million the limit imposed by section 11(7) of the said Act of 1977 and authorising the Secretary of State to provide by order for that limit to be increased or further increased up to a maximum of £1,400 million; and
(b) the payment of any sums into the National Loans Fund or the Consolidated Fund.—[Mr. Archie Hamilton.]

Orders of the Day — Harwich Parkeston Quay Bill

Order for Second Reading read.

7 pm

Sir Julian Ridsdale: I beg to move, That the Bill be now read a Second time.
Before I deal with the principle of the Bill, may I remind the House of the distinction between the Second Reading of a public Bill and a private Bill. "Erskine May" says:
a public Bill being founded on reasons of state policy, the House, in agreeing to its second reading, accepts and affirms those reasons; but the expediency of a private Bill, being mainly founded on allegations of fact, which have not yet been proved, the House, in agreeing to its second reading, affirms the principle of the Bill conditionally, and subject to the proof of such allegations before the committee. Where, irrespective of such facts, the principle is objectionable, the House will not consent to the second reading; but otherwise, the expediency of the measure is usually left for the consideration of the committee.
In general, the principle of the Bill is to create new quays, vital for our growing trade, with no damage to the environment, and to reclaim land which will become valuable industrial land with admirable port facilities in an area which has a high level of unemployment. I hope that no hon. Member will wish to vote against that principle. Of course, there are matters in dispute, but, as "Erskine May" advises,
the expediency of the measure is usually left for the consideration of the committee.
I trust that the House will follow that advice.
The principal object of the Bill is to authorise the development of Bath Side bay, Harwich, which lies between the existing harbour facilities at Parkeston quay to the west and Harwich to the east. The development will consist of the phased construction of a quay wall fronting the river Stour across Bath Side bay. In addition, approximately 330 acreas of tidal mud flats will be reclaimed. Once constructed the quay wall will provide four deep-sea container berths and facilities for handling approximately 100,000 containers per annum.
It is expected that the first container berth could be in operation within 18 months of the work beginning and the construction of the remaining three container berths will take place when required to meet commercial shipping demands.
It is exciting that the Bill, which creates quays as they become necessary, offers the first real prospect for the development of Bath Side bay, a project first proposed in the 1850s and a development by a company that has the resources to finance such a project.
The anticipated cost of the construction of the sea wall and the reclamation is £33 million at present-day prices. The overall cost of the development is expected to be in the region of £100 million at present day prices.
To the south of the port area will be a substantial area of land suitable for industrial and commercial use. Implementation, in association with the construction of stage two of the Dovercourt bypass, will ensure adequate road access.
Naturally, with the high rates of unemployment that there are in north-east Essex, I welcome the development. Many of my constituents are watching expectantly for the employment prospects that are likely to arise from the Bill, not only in the port itself but in the industrial and commercial area directly to the south of it.
Therefore, the House would bear a grave responsibility if, for some unfortunate reason, this evening it denies a Second Reading to the Bill, especially now that there is the capital and momentum to move forward from the considerable progress that has already been made since the new management took over responsibility for the port of Parkeston quay, Harwich.
Last year, thanks to quick decisions being made by the new management and help from the Essex county council, a substantial part of the land behind the proposed first berth and around the shore line of Bath Side bay has already been reclaimed with the necessary consents but without statutory powers, as the opportunity arose to acquire a large quantity of good quality material recovered from the dredging of the main channel of Harwich harbour. That reclamation was carried out by the Harwich harbour board with the present company's consent. It amounts to approximately 25 per cent. of the total area of the bay previously covered by water at high tide.
As the Second Reading of the Bill has already been blocked, and although this would be better taken in Committee, I should explain that there was a previous Act called the Bath Side Bay Development Act 1972 in which the Ear1par Development Company Ltd. obtained powers for the reclamation and development of port facilities in Bath Side bay. The works to be authorised by this Bill are on what is virtually the same site as those authorised by the 1972 Act. It is for that reason that the Bill proposes the repeal of that Act, which has never been implemented. Indeed, there is no way in which the 1972 Act could be implemented without the agreement and participation of Sealink Holdings Ltd. as it is the owner of a major part of the land lying above low water mark within the area designated for development in the Act. There are no provisions in the Act whereby Earlpar can acquire Sealink Holdings Ltd's interests other than by agreement.
Harwich Terminal Holdings, the holding company of Ear1par, makes much of the point that the 1972 Act authorised reclamation by sealing off the bay from the main river channel, in the first instance by the formation of a bund across the bay. It says that that was required by the Essex river authority, but investigation of the relevant papers shows that that is not so, rather that the river authority was concerned that if Earlpar were to proceed with reclamation in that way it should show that it had adequate funds to complete the job, so that the sealing off operation would not be left incomplete and without the subsequent back up of landward reclamation.
There is no specific provision in the 1972 Act to require reclamation in that way, but the works then authorised specified bunds stretching across the bay and would not be apt for the method of reclamation now proposed—reclaiming the bay progressively from the eastern end, keeping the reclamation of the landward area in step with any extension of the quay face.
The scheme of development authorised by the 1972 Act is, in the view of Sealink Holdings Ltd., impracticable as it involves the cost of comprehensive reclamation of Bath Side bay in the first instance before any deep water port facilities can be provided.

Mr. Nicholas Fairbairn: What section of the 1972 Act says, first, as my hon. Friend has just told us, that the method proposed is not provided for, and, secondly, that the method that he has just described is provided for?

Sir Julian Ridsdale: I shall give my hon. Friend a reference if I have the leave of the House to reply to the debate.
Harwich Terminal Holdings also complained of discourtesy, in that the Bill has been promoted without notice to it. There is a long history of negotiations, culminating in the proposal made on behalf of Harwich Terminal Holdings that it should sell the 1972 Act for £7·24 million. After considering this proposal, put to it by merchant bankers on behalf of Harwich Terminal Holdings and Earlpar, a letter was written by Sea Containers on 20 March 1985 informing them that the company had decided that it could proceed without the assistance of Harwich Terminal Holdings or its associates. There were further discussions, but these were inconclusive. I am satisfied in connection with the deposit of the Bill that due notice was served on Earlpar in respect of the intended repeal of its 1972 Act.
Felixstowe Dock and Railway Company is promoting its own Bill to authorise extension of its container port. I was glad to speak in support of its Bill last year I hope that it will agree in principle to this Bill and that any worries that it may have about the phased development of Parkeston quay will be ironed out in Committee. This also applies to the concerns of some of my constituents about the right to use Gas House creek and the adjoining Gas House quay. I am glad that negotiations are in progress with Trinity House, with a view to solving points of difference amicably.
Finally, may I remind the House again that the principle of this Bill is to create new quays, with no damage to the environment, and to reclaim land, some of which will become valuable industrial land with admirable port facilities in an area that has very high unemployment. I sincerely trust that no hon. Member will wish to vote against that principle and will be willing to let matters of dispute be for consideration of the Committee, as ' Erskine May" advises. I, too, underline the need for urgency in coming to a decision.

Mr. Albert McQuarrie: I do not want to delay my hon. Friend's initial speech. I hope sincerely that later he will have the permission of the House to answer the debate, but I should not like him to sit down now without saying what, if any, consideration has been given by the present owners of Sealink to providing compensation for Earlpar. My hon. Friend referred to the sum of £7·24 million, but I am sure he will agree that that figure is now dead and gone and that since then there have been no further negotiations.

Sir Julian Ridsdale: I am glad that my hon. Friend has raised that extremely important point. Sealink and Harwich Terminal Holdings are conducting negotiations upon that matter. I have been informed today that Harwich Terminal Holdings said that it did not wish to have a meeting with Sealink Holdings because it would not be a meeting between the heads of the companies at which an agreement could be reached. I am glad to be able to tell my hon. Friend that Sealink Holdings said in reply that it is perfectly willing to have a meeting to conduct negotiations on this matter with the heads of the companies concerned. I think that that covers my hon. Friend's point. The promoters of the Bill are naturally anxious to reach agreement with Harwich Terminal Holdings upon this question.

Mr. Fairbairn: If I may pursue that point with my hon. Friend, assuming that the House gives a Second Reading to the Bill tonight, does he take the view that Sealink's bargaining position will be strengthened and that that of Harwich Terminal Holdings will be weakened, or does he take the view that it will be left as it is? If he takes the view that it will be left as it is, what is the haste for a Second Reading of the Bill before the settlement?

Sir Julian Ridsdale: The haste is because of the momentum that has been created in Harwich. I pointed out in my speech that there is a very high rate of unemployment in Harwich and that there is an urgent desire to reclaim the land in order to create industrial land in Harwich that a company, with reasonable assets, will wish to take up.

Mr. Fairbairn: What about the bargaining?

Sir Julian Ridsdale: I shall deal with that point. First, however, may I underline the urgency of this matter. Those of my hon. Friends who are faced with a rate of unemployment that is similar to that in Harwich will agree with me that I ought to do my best to urge them to give a Second Reading in principle to the Bill. "Erskine May" advises that this is a matter of expediency.
As for the negotiations, I think that my hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn) will agree that the first price asked for the Bill was extremely high. I do not wish to put myself in the middle of the negotiations, but I know the proprietors. Having listened to the debate and having looked at the facts, as I have done, I am sure that they will want a reasonable agreement to be reached with Harwich Terminal Holdings. It is impossible for me, as a middleman, to say more than that, as I have no responsibility for the matter. All I ask my hon. Friends to do is to concentrate upon the principle of the Bill. If they object to it, they will wish to vote against its Second Reading or to talk the Bill out.
I wish to underline the need for urgency in reaching a decision. The fall in the price of oil should create a great demand for British manufactured goods throughout the Community and worldwide. The creation of these port facilities would result in Harwich being able to take shipping from any part of the world. A container port would be created on our east coast which would result in great advantages not only for my constituents but for Essex and the country generally.
For these reasons, I hope that the House will give a Second Reading to the Bill and that on the question of expediency it will follow the advice of "Erskine May" and deal with those matters in Committee.

Mr. Willie Hamilton: I beg to move,
That the Bill be read a Second time upon this day six months.
Hon. Members may wonder why a Scottish Member should move a motion. They might be even more curious—

Mr. Deputy Speaker (Mr. Harold Walker): Order. I am sorry to interrupt the hon. Gentleman, but the motion that he sought to move has not been selected, and, indeed, is not normally selected.

Mr. Hamilton: I beg your pardon, Mr. Deputy Speaker. I was about to explain why the motion standing in my name is supported by five hon. Members of Scottish origin—even if they are not all Scottish Members. One

of them represented a Scottish constituency, but now represents Southend, East. I do not know their motives in supporting the motion. Indeed, I am rather embarrassed to find myself in such undesirable company. I hasten to add that I have had no consultations whatever on the matter. However, I have had some private conversations with the hon. Member for Harwich (Sir J. Ridsdale), and I think that he understands my position fairly well. I have no objection to any hon. Member who seeks to further his constituency's interests, especially if there is any prospect of creating jobs in an area—like many others—that has high unemployment.
I should make my position clear. My active interest in private Bill procedure was excited by the strange and unsavoury story of the Felixstowe Bill and by the experiences of my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) when she served on the Committee dealing with that Bill. On 12 February, we had a lively debate following a motion from the Chairman of Ways and Means to reduce the quorum in order to expedite the Bill's passage. During that debate, I and other Opposition Members revealed that the Bill's promoters were major financial contributors to the Tory party. We also sought to show how antiquated and unsatisfactory private Bill practice is. The procedure was, and is, open to abuse of one sort or another.
On that occasion, history was made when the Chairman of Ways and Means, as you will recall, Mr. Deputy Speaker, moved that motion and implied that an inquiry into that procedure would be initiated. Those debates were obviously read in Harwich, because a lady wrote me a long letter, saying that the Bill
illustrates the deficiencies of Private Bill procedures to an even greater degree than the Felixstowe Bill.
In an informed way, she then eloquently explained why the Bill should be rejected. I need not go into the details of that letter now, but she said that the Bill was promoted by Sealink Harbours Ltd., which is a United Kingdom company with a Bermudan holding company headed by Mr. James Sherwood, of Channel tunnel fame. The implication is clear.
That lady suggested that some inquiries might be made about Mr. Sherwood and his activities vis-a-vis the Conservative party, following the relationship that we established between the company promoting the Felixstowe Bill and the Conservative party. She made several points, and said that the plan would threaten the outstanding conservation area of old Harwich and Gas House creek, which abuts the conservation area.

Sir Bernard Braine: As always, I have listened with respect to the hon. Gentleman. He has referred to the private Bill procedure. Surely he is aware that his informant's objections could be properly dealt with in Committee. Does not the hon. Gentleman adhere to that view? If not, why not?

Mr. Hamilton: I do not know whether the hon. Gentleman was present when we debated the Felixstowe Bill, but we then pointed out the wholly antiquated and unsatisfactory nature of that procedure. Four hon. Members were appointed to the Committee and were compelled to attend, on penalty of being fined. My hon. Friend the Member for Cynon Valley happened to be serving on the Committee debating the Gas Bill as well. She made the very relevant point that her constituents were much more concerned that she should attend the


Committee debating the Gas Bill and the privatisation of the gas industry than that she should attend a Committee debating the Felixstowe Bill. She asked me what she should do, and I told her not to attend the sittings of the Committee on the Felixstowe Bill. She did not attend the latter, and she then received stern letters from the authorities saying that she must attend. I told her not to and she decided not to attend.
At that point, my hon. Friend the Member for Leeds, Central (Mr. Fatchett) also refused to attend, and the Chairman of Ways and Means, whose duty it is to see that private Bills get through, moved a motion reducing the quorum to, I believe, three. That meant that there were two Conservative Members and possibly one Labour Member if he or she could be found. Those three hon. Members were to determine a matter of crucial national interest. Opposition Members all said that the procedure was absurd.
It is ridiculous that a matter of national policy should be determined by three or four Back Benchers who have been compelled to attend and to hear hour after hour of droning from highly paid counsel and QCs. The only people to laugh at our private Bill procedure are parliamentary agents and counsel. They are making money out of it. It is time that that came to an end.
I am under no illusions about what is happening. I support the hon. Member for Harwich in his attempt to create jobs. I would support any hon. Member who tried to do that. The Bill raises several points that could be raised in Committee, but then that procedure is unsatisfactory.

Sir Eldon Griffiths: I introduced the Felixstowe Bill and followed its Committee stage with interest. The hon. Gentleman is a very good constitutionalist and Member of Parliament. But if he believes that private Bill procedures are out of date and anachronistic, would it not be better to go through the proper procedures for changing them than to recommend to his hon. Friends that they should, in effect, go on strike?

Mr. Hamilton: The hon. Gentleman is also a skilled parliamentarian and must understand that there are limits to what a Back Bencher can do. An investigation into the private Bill procedure is in hand, but meanwhile we must take what steps we can to prevent or inhibit that procedure's smooth operation, and to influence that Committee's proceedings. The private Bill procedure must be radically changed, because it is at present absurd.

Mr. Bill Walker: The hon. Gentleman will be aware, being a Scottish Member, that it is not unusual to be on more than one Committee at a time. That means that the Committee which the hon. Member does not attend does not do its work properly or effectively. An examination of procedure is long overdue.

Mr. Hamilton: The hon. Gentleman supports my view. The more hon. Members who take that view, the more pressure can be put on the Chairman of Ways and Means to make a radical change and to end the nonsense. I am not worried about forcing a vote today, so long as the protest about the absurdity of our procedures is put on the record.
The Bill proposes to repeal the Bathside Bay Development Act 1972 which operates until 1992 and was obtained through the private Bill procedure. The Bill

repeats the substance of that Act's provisions. The Bill is proposed by Sealink Harbours Ltd. The powers of the 1972 Act are vested in the Earlpar Development Company Ltd., which has now petitioned. The chairman of that company happens to be the Earl of Lauderdale—Patrick Maitland, as I knew him many years ago in the House. I am in strange company.
The Earl of Lauderdale has written to me and seen me. He has a financial interest, which he has frankly declared. He has given me information which is not readily available. This is a complex matter which underlines the undesirability of dealing with such matters in a private Bill Committee, which we now have to tolerate.

Mr. Fairbairn: As someone with vast experience of the procedure, who has been both perspicacious in observing it and critical of it, can the hon. Gentleman tell me whether he knows of a precedent for the proposal that one private Bill should be brought before Parliament by one interested party in order to extinguish the inalienable rights granted by Parliament to another party?

Mr. Hamilton: I do not think that there is such a precedent. A private Bill was passed by the House in 1972 and this, another private Bill, seeks to repeal that measure. That is reprehensible and undesirable and the House has the power to stop it.
The 1972 Act and the Bill relate to the reclamation for harbour development of more than 250 acres of tidal mudflats west of Harwich, fronting the Stour-Orwell estuary. The engineering feasibility of the reclamation project was first established by the Earlpar company, which negotiated over the years with British Rail, the freeholders, to undertake the work on a development agreement, then a lease of the reclaimed land. The development was obstructed by the requirements of section 9 of the Harbours Act 1964. That required Government consent for any harbour works involving capital investment above a certain amount. Consent was dependent on a recommendation by the National Ports Council. This, in turn, required the company to demonstrate that it had a contractual user commitment in bankable terms to ensure that the capital could be both serviced and redeemed. The prospective user had to be willing to undertake to make "X" use of the harbour, at "Y" dues, over "Z" period—all this for a harbour not yet built, on land not yet reclaimed.
The section 9 requirement was not repealed until the Ports (Finance) Act 1985. However, the freehold of that site today, having been passed by British Rail to Sealink, had through privatisation passed by July 1984 to Mr. John Sherwood's American Sea Containers Ltd. The sale was carried out under the Transport Act 1981, which requires any purchaser of Sealink's harbour interests to take over related liabilities as well as assets. The liabilities included an enjoyment of 15 years of technical studies determining the feasibility of a reclamation project and geophysical conditions for harbour development. They had been made freely available by the Earlpar company to the freeholder, British Rail, in the light of successive letters of intent.
Sea Containers Ltd. has so far ignored Earlpar's offer to sell the company's assets and the benefit of the studies as well as introduce a user, both to make a firm commitment and to help fund the development. Instead, Sea Containers has chosen to seek to obtain these benefits for nothing by a private Bill—[Interruption.] I see that


the hon. Member for Harwich (Sir J. Ridsdale) disagrees with me. I hope that he will make these matters clear later because they are sore points to petitioners against the Biil.
The Bill ignores the environmental protests of those in Harwich who are worried about protecting and using Gashouse creek at the east end of Bath Side Bay. I understand that the petitioners, on their behalf, have been refused a hearing before the Committee on Opposed Bills to be set up should the Bill obtain a Second Reading. Environmental rights will thus be eliminated without being heard. The creek was specifically protected under the 1972 Act.
The hon. Member for Harwich mentioned Trinity House interests. I am not sure whether those interests are protected, but, according to my information, they are likely to be ignored by the Bill. Trinity House has petitioned, and I understand that negotiations with the promoters are proceeding. I understand that the port of Felixstowe has also petitioned on the ground of anxiety about the effect which piecemeal harbour development will have on the estuarial regime. I do not know whether that is so. It needs explanation, and I hope that the hon. Member for Harwich will explain.
That interest was protected by the 1972 Act which this Bill proposes to repeal. The regime is also threatened by increasingly high tides while the volume of sea-going freight handled on the estuary has risen by about 50 per cent. in the past five years.
The Bill describes the original 1972 Act as
spent or of no practical utility".
The hon. Member for Harwich said that. At the time that Sealink was being privatised, the Harwich harbour authority undertook dredging operations in the estuary and, at the instance of the Earlpar company, was persuaded by British Rail to deposit the spoils on Bath Side bay to start off the reclamation. Nearly one third of Bath Side has been filled in as a result. The parliamentary powers which protected this operation from interference by others—for example, the dumping of harmful refuse—existed in the 1972 Act. Therefore, that Act has already proved its relevance and value.
When I got the letter from the lady in Harwich and also the representations of the Earl of Lauderdale, I received, as a consequence, a letter from the parliamentary agents, Sherwood and Company, of Queen Anne's Chambers, Westminster, which asked me to give my reasons for objecting to the Bill. I simply replied by enclosing a copy of the long letter which I had received from the lady in Harwich. I deleted her name and address because I did not have her permission to use it. I also explained my views, in principle, on the private Bill procedure.
The lady subsequently apologised to the hon. Member for Harwich because she had made some incorrect allegations in her letter which she later withdrew. I had stirred up a hornet's nest which I regret. I do not regret my part in these proceedings. My hon. Friend the Member for Denton and Reddish (Mr. Bennett) had put down a blocking motion on the Bill, to which I added my name. I consulted my hon. Friend about the terms of the letter and my hon. Friend asked me to put my name to the blocking motion because there was something irregular about it. That is confirmed to some extent by the letter from the lady in Harwich. I shall end with a fairly lengthy quotation, but I believe it is important to get it on the record.

Mr. Fairbairn: Let's have it all.

Mr. Hamilton: In due course I may allow the hon. and learned Gentleman to see the letter.
The letter states:
Why are Parliament and the people of Harwich subjected to the introduction of this Bill? There is no doubt in my mind, and that of others, that this is only their first foray into the conservation area. At present, you may know, the seamen here are on strike due to redundancies and the loss of Sealink's freight contract to Felixstowe. If you consult the Unions here, you will find that they have further fears, particularly regarding intrusion of foreign crews and workers, and yet this town would become `Sealinkville', wholly dependent on Sealink if this Bill were enacted. Questions were asked in Committee on the Felixstowe Bill concerning the Promoters' donations to Tory Party funds—Mr. Sherwood has friends in high places—it might be interesting to put the same questions to him.
If this Bill goes to Committee, I hope the same questions will be put to Mr. Sherwood as were put to the relevant people who promoted the Felixstowe Bill.
The letter continues to consider the role of the Crown Estate Commissioners which was not mentioned by the hon. Member for Harwich:
Yet another aspect is the Crown Estate Commissioners. I have been attempting to investigate the ownership of land delineated in the Book of Reference to the Bill, as the Promoters can list any land as theirs or reputed to be theirs with no proof of ownership, the system relying entirely on someone petitioning to say it is not; such research is also lengthy, which the procedural timetable does not allow for. The Crown Estate Commissioners state that they are already negotiating with Sealink about making their land in Bath Side Bay available to Sealink. This seems incredible with an Act over the area still in operation and a Bill just introduced; I trust that they will not be permitted to transfer it to Sealink whilst the Bill is before the House. My other information from them"—
that is, the Crown Estates Commissioners—
concerned the bed of the Creek which Sealink purport to own. They say this was transferred to the United Land Company in 1871. They agree with my contention that the bed of a tidal river so far as the tide ebbs and flows is vested in the Crown and that when it is granted or acquired with this grant or acquisition passes intrinsically the public right of navigation and fishing right and rights ancillary thereto over the locus of the grant or acquisition.

Mr. Fairbairn: rose—

Mr. Hamilton: I shall just finish the paragraph:
They state that the custodian of such rights on behalf of the public is the Attorney General. I trust that the Attorney General will enforce these rights in the case of this Bill.

Mr. Fairbairn: This may seem a strange question for one Scottish Member to ask another about the law of England but, given that the lady is right about these matters, do the regalia majora and regalia minora apply to the shores of England as they do to the shores of Scotland and are the shores the rights of the Crown and not the rights of the proprietor?

Mr. Hamilton: I do not know. I think the hon. and learned Gentleman should apply for membership of the Committee. I will recommend him for that because clearly he has many pertinent questions to put to the promoters of the Bill.
I shall finish the quote:
I think, as you do, that the fight for reform in Private Bill procedures is a fight for some democratic representation for common people in these matters. Justice is not being done and the interests of a multinational company are being given not only precedence but almost sole hearing. Private Bill procedures in Bills such as the Harwich Parkeston Quay Bill are no longer democratic in any acceptable sense.
I entirely agree with that proposition; and that is why I am making this speech. I want it to be put on record


—I hope other hon. Members will put it on record in the course of the Bill—that, unless we get this procedure reformed and modernised, we ought not to allow private Bills to go through the House under this procedure.

Sir Eldon Griffiths: I also want the procedure reformed. Does the hon. Gentleman think that it is right that he should tell the House that the letter he is reading is from Mrs. Cullen, who was originally a petitioner against the Bill? Her petition was struck out by the Court of Referees. Her locus was disallowed by the procedures of this House because she does not claim any other right but as a member of the public. Since the Court of Referees has taken that view, does the hon. Gentleman think it is proper to seek to import her objections when the proper procedures have said that they are not revelant?

Mr. Hamilton: I do not know, but she has made some valid arguments in the letter, which ought to be recorded. I have not asked her permission to quote the letter and I have deliberately sought not to identify her, but the hon. Member for Bury St. Edmunds (Sir E. Griffiths) has, and he may be right. The principles on which she is acting are sound. She believes that there are rights of individual citizens which are being treated in a slipshod manner and that citizens are unable to put their arguments to a Committee of the House. Such people's interests are not being protected as they should be.
These are matters of fundamental national interest and they should not be dealt with in this feudalistic way, which gives only the lawyers acting on behalf of the promoters or the petitioners a fair deal. If I put that on record and repeat it every time that a private Bill is considered in the House, the message might eventually lead to radical change in the procedure.

Sir Bernard Braine: The hon. Member for Fife, Central (Mr. Hamilton) has been a Member of the House for a long time and has a great knowledge of procedure. Anything that he says on that subject must be listened to with respect. I had a little sympathy with him at one stage, but he did not answer my question. I am not concerned who the lady is. As the hon. Gentleman did not have her permission to reveal her name, he properly did not do so, but he did not deny the allegation of my hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths) that her case was not thought to be justified and that her petition was rejected by the Court of Referees.
I did not want to go into that, for the reason that my question was not whether the private Bill procedure is as well framed and conducted as it should be, but whether, bearing in mind the objections that the hon. Gentleman voiced on behalf of the lady concerned, he nevertheless thought that these matters could properly be considered in Committee under the existing private Bill procedure.
I have always understood that to be the case. I should have thought that the Earl of Lauderdale could make such objections as he has in Committee, irrespective of whether or not he has an interest in the matter. Surely we are interested in arriving at objective truth, discovering where justice lies and what is the right thing to do, and that can be done in Committee.

Mr. Bill Walker: My right hon. Friend has also been a Member of the House for a long time and is experienced in procedural matters. Does he have any experience of a private Bill being introduced to remove a private Act?

Sir Bernard Braine: No, I do not recall any such precedent. Perhaps that ought to be considered, but I do not believe that it should delay the Bill's passage. The point could be considered in detail in Committee.
I am speaking as a senior Member for the county of Essex because I support what my colleague of many years' standing, my hon. Friend the Member for Harwich (Sir J. Ridsdale), is doing. He has been a doughty campaigner for the north-eastern part of our county, and he is as anxious as others in that area that nothing should stand in the way of a scheme which will bring undoubted benefits to our county as a whole.
Essex is expanding. Our population will grow well beyond the year 2000 and the development of the M25 and the M 11 means that we shall experience considerable growth in business and industry. My hon. Friend the Member for Hornchurch (Mr. Squire) nods agreement, for he knows that this development will enable goods to reach the continent more speedily through the east coast ports. The Bill would facilitate much more than port expansion next door to the existing container handling complex at Parkeston—or to improve employment opportunities in my hon. Friend's constituency.
The good effects will be felt throughout our county. That is why the Essex county council strongly favours a swift decision. Indeed, it is quite remarkable that the first container berth is expected to be ready within 18 months of the start of the work and that three more are likely to follow. The project is linked to the provision of substantial additional land for industrial and commercial development and the construction of the second phase of the Dovercourt bypass. Some work has already been undertaken, and we are now raring to go.
In short, the project is likely to lead to a substantial increase in container traffic, which will stimulate business in an area far beyond Harwich, extending to south-east Essex, mid-Essex and the former metropolitan Essex, which is now in Greater London. That development is needed now.
I do not propose to go into my hon. Friend's moderately argued case in detail. Perhaps there are objections which ought to be heard in accordance with our established private Bill traditions and procedures, but the right place for that is in Committee. I did not agree with all of the conclusions reached by the hon. Member for Fife, Central, but he adduced some arguments that we should note. However, that has no bearing on the desirability of the Bill's swift passage or on the urgency of the work to be done. I hope, therefore, that the House will support the Bill.
I should like to thank my hon. Friend the Member for Harwich, on behalf of my part of Essex, for his skill and efficacy in bringing this matter before us.

Mr. Albert McQuarrie: I sympathise with the points made so eloquently by my hon. Friend the Member for Harwich (Sir J. Ridsdale) about employment in his constituency. During the past few months, I have had considerable experience in piloting private Bills through the House, fortunately successfully.
I also subscribe to the views expressed by the hon. Member for Fife, Central (Mr. Hamilton). Something must be done about private Bills, which are in many cases ridiculous. It is an abuse of the House for them to be brought here instead of being dealt with through normal legislation, which is possible in local government.
Having taken much interest in this issue and read the Bill thoroughly, I shall devote my remarks to what I consider to be the unfair treatment which Earlpar Development Company has received from the new owner of Sealink and what has taken place since the Bath Side Bay Development Act 1972 was passed. I shall endeavour to respect the statement by my hon. Friend the Member for Harwich that discussions are taking place between Sealink and Harwich Terminal Holdings, whose wholly owned subsidiary is the Earlpar Development Company.
Clause 23 and the second schedule to the Bill would repeal the Bath Side Bay Development Act, granted by Parliament under the private Bill procedure in 1972 and extended by the Secretary of State for Transport to run until 1992—a further six years. The Act was granted to Harwich Terminal Holdings, but the wholly owned subsidiary of that company was the Earlpar Development Company, which was incorporated in 1970.
Harwich Terminal Holdings is a petitioner against the Bill. It owns Earlpar Development Company, along with a development account asset worth about £700,000 at historical cost. That represents cash outgoings and obligations in respect of expenses incurred in preparing and advancing the reclamation and development scheme with which the Bill and the existing Act have been concerned for nearly 15 years.
The original Act and the Bill deal with the powers, as the hon. Member for Fife, Central pointed out.

Mr. Fairbairn: Will my hon. Friend advise me whether there are any proposals in the Bill to compensate the original company for the work it has done in the meantime when the new company takes over its permanent powers?

Mr.McQuarrie: I hope that my hon. and learned Friend will bear with me, because I intend to take that issue fully into account.
The original Act and the Bill deal with the powers to reclaim about 250 acres of tidal mud flats called Bath Side bay, fronting the Stour-Orwell estuary opposite Felixstowe, between Harwich on the east and Parkeston quay on the west. The freehold of Parkeston quay and Bath Side bay was passed by British Rail to Sealink, which on privatisation was bought by the Bermuda-registered American company, Sea Containers, on 27 July 1984. Sealink is a promoter of the Bill to establish its powers to carry out the reclamation and the harbour development while extinguishing those powers established by the 1972 Act, which was granted to the Earlpar Development Company.
When buying Sealink, Mr. James Sherwood, the president of Sea Containers, could not obtain more than the Transport Act 1981 authorised British Rail to dispose of. Nor could he escape whatever liabilities were included in the package. This is a very important factor. Parliament authorised British Rail to sell its Sealink Harbours undertakings,
including all property rights and liabilities

of that part of Sealink which applied to Parkeston quay. Among those assets was the freehold of Bath Side bay's mud flats. That asset embraced its inherent potential for reclamation and development. Purchase of that development potential could mean nothing without a clear and sure liability for all the related engineering studies and the other works that had advanced the physical feasibility of the reclamation scheme during a period of 12 years.
Reclamation and development of the Bath Side bay had been dreamt about and rejected as, at worst, impractical, and, at best, uneconomic, for many years. But about 1968, Robert Earley and Partners—now Earley Campling Lee and Partners—later in association with the Earlpar Development Company, commissioned studies which in 1969 were explained to British Rail. Thus was first established the feasibility of the scheme. That and a series of soil surveys, hydrological studies and other investigations were commissioned by the Earlpar Development Company, it having the copyright, which was made freely available to British Rail on the clear understanding—repeatedly confirmed—that the Earlpar Development Company would carry out the scheme.
As regards British Rail, and later Sealink, it lay with the freeholder to grant a development agreement so that Earlpar Development Company could have access to the tidal mud flats in the first place. That development agreement was to be followed by a lease of the land once it had been reclaimed.
British Rail was throughout sympathetic, even enthusiastic, but anxieties about competition and a greed for extracting the maximum reliability inhibited progress. The consultant's—Earlpar Development Company—first approach was on 22 October 1969, and it was rewarded with a sympathetic reply from British Rail early in 1970, setting the tone of the relationship which would exist for the next 14 years.
The letter from British Rail read:
I assure you that if any useful developments could be introduced into the Bath Side area at Harwich, the Board would be only too pleased to assist by making land available. Our past considerations of this matter have always led us to believe that the cost of reclamation would be prohibitive, but since your company appear to be sure that more modern methods of reclamation will make this a feasible proposition, you may rest assured that the Board do not wish to place any obstacle in your way.
A series of letters and meetings followed, during which, in April 1971, British Rail confirmed its intent to the point that Earlpar enjoyed its support for the Bath Side Bay Development Bill, which was enacted in August 1972. One and a half years later, in February 1974, draft heads of intention were agreed in a 10,000-word document of 34 pages. The worst sticking points were British Rail's protectionist requirement against Earlpar's port servicing trade with Benelux or any port in France as far west as Boulogne. But, despite that, three letters from the British Rail chairman, Mr. Richard Marsh—who is now in the Upper House—confirmed British Rail's readiness to proceed.
Progress was impeded by the Harbours Act 1964, because no port development above a certain capital cost could proceed without section 9 consent, which was mentioned by the hon. Member for Fife, Central. The Government would grant this only after consulting the National Ports Council. That body needed a bankable, contractual user commitment to prove that the user was ready to guarantee the use of X facilities over Y number


of years at Z cost. This had to be in terms sufficient to service and later to redeem the capital invested. Such a commitment was required for a harbour that was unbuilt on land that was then unreclaimed. That inhibiting requirement remained in force until it was repealed by the Ports (Finance) Act 1985—about the time that Sea Containers approached Sealink.
As far back as 1972, Earlpar's first application for a section 9 consent was refused, but the company was invited to return with a further application. That was submitted in April 1974 but rejected eight months later. The grounds for rejection were political: that such a private enterprise project could not be allowed to pre-empt the then Government's policy of nationalising the ports.
By the autumn of 1977 the company was back in negotiation. British Rail gave a letter of support for a third application for section 9 consent, but the application failed because British Rail's terms for a trading clause to protect its narrow shipping interests, Benelux to Boulogne, were found to conflict with article 85 of the treaty of Rome.
British Rail proposed funding the development itself, employing Earlpar as its agent, with its Act. British Rail finally withdrew from this plan because of the trading climate, but gave yet another letter of intent dated June 1980 to enable Earlpar to try once more for section 9 consent and to help it in raising the finance. Four months later the then Secretary of State for the Environment extended the powers of the 1972 Act until 9 August 1992.
In July 1981 the company was at last given a section 9 consent for reclamation alone. The company also received British Rail's proposals to extend its letter of intent to take account of the new situation. Unfortunately, progress was inhibited by the prospect of Sealink being privatised under the Transport Act 1981. As long as privatisation was pending, no finance could be firmed up.
The purchase of Sealink by Sea Containers on 29 July 1984 was quickly followed by Mr. James Sherwood's public announcement that he meant to reclaim Bath Side bay and to develop that whole frontage as a major new port complex in competition with Felixstowe across the water. Mr. Sherwood's company took over at a favourable time because, thanks to Earlpar's warning, initiative and plans, the British Railways Board, the Harwich harbour authority and the Essex county council all saw the danger of a missed opportunity.
The harbour authority had been planning to dump at sea all the rich sandy spoil dredged up in deepening its estuary channel. The authority agreed to put the spoil ashore at Bath Side and thus get the reclamation started. The dredging was carried out by Harwich Harbour Conservancy Board, and deposition of the spoil on Bath Side was funded by Essex county council, as it was then, to prepare for the Dovercourt bypass road. It was done with the consent of Sealink which, to be fair, was the freeholder, but it was also done with the authorisation of the Secretary of State for Transport. That authorisation was given on 29 November 1984, and he cited section 34 of the Coast Protection Act 1949.
The company had a large number of contacts with the authorities and they certainly require to be spoken about, because it has to be proved that Earlpar has been unfairly dealt with by this new company, Sea Containers.

Mr. Fairbairn: My hon. Friend spoke about section 34 of the Coast Protection Act 1949 and said that it was used by the Secretary of State to obtain the necessary

powers or to frustrate the company. Does my hon. Friend think that was a proper thing to do, or does he think that it demonstrates the fallacy and falsehood of the Bill?

Mr. McQuarrie: I am grateful to my hon. and learned Friend for his comments. He is quite right. The action by the Secretary of State demonstrates the fallacy and the shortfall in the Bill.
The chronological summary of Earlpar's progress commences in October 1969 and continues until the summer of 1974 when negotiations with the British Railways Board and its property division resulted in British Rail making a clear statement of its wish to proceed.
In 1972, the first rejection of the application for section 9 consent under the Harbours Act 1964 took place. In April 1972 the company was granted planning consent, and in 1973 draft heads of intention were proposed by British Rail. In 1974 the second rejection on political grounds of a section 9 application occurred. In February 1975, this phase of talks with British Rail was concluded. From February 1975 until the end of 1977 efforts focused on securing a contractual user commitment to satisfy the essential requirement for National Ports Council support for another section 9 application. In 1978 and 1981, further conversations took place with British Rail to try to arrange an agreement.

Mr. Fairbairn: My hon. Friend is rushing through these matters. These important negotiations were an attempt to create employment by redeeming this land and making port facilities. The negotiations were important. They are not matters that we can pass over just by saying that they took place in those years. Why was there no acceptance of a matter about which we are being asked to pass a Bill to make possible immediately?

Mr. McQuarrie: I am grateful to my hon. and learned Friend for drawing attention to that. I have no wish to delay the House, but equally I have no wish that the House should not hear what should be said about this Bill. If my hon. and learned Friend feels that I am rushing through it—as he knows, it is my wont to speak fast rather than slowly—I shall endeavour to speak a little more slowly for his benefit. I agree that these are important matters. Important discussions took place. They cannot be taken lightly, and I do not want to give the impression that they were rushed. A lot of detail was covered in the discussions and I shall come to that during my speech.
In 1978 yet another section 9 application was made. It was frustrated when it was discovered that restrictive clauses in the proposed Bath Side bay agreement protecting Sealink traffic from Benelux to Boulogne would conflict with article 85 of the treaty of Rome.
In 1979, British Rail proposed that it would make a direct investment in the project. That was a clear indication of British Rail's confidence that Earlpar was on the right track with the project. Unfortunately, negotiations proved abortive during 1980 because of the heavy front-end loading of the scheme and the forecast of delayed returns. British Rail issued a further letter of intent in 1980 and it was later given an extension verbally. In August 1980, the Bath Side bay Development Act was extended to 1992. In July 1981, section 9 consent was granted for reclamation only. At that stage efforts were


focused on raising funds, but these were inhibited by the privatisation programme included in the Transport Act 1981.
In March 1984, there was news of the Harwich Harbour Conservancy Board's plan to dump at sea spoil obtained from estuarial dredging. From April to July of 1984 there were intensive negotiations with Sealink, the Harwich Harbour Conservancy Board and Essex county council to ensure that the spoil was used for partial reclamation. Authorisation to dump the spoil on Bath Side bay was given by the Department of Transport in November 1984. On 27 July 1984, Sealink sold to Sea Containers Ltd. At that stage, further conversations with Harwich Terminal Holdings Ltd. were brought to a halt. In November 1984 dredging started and spoil was deposited according to the plans of Harwich International Terminals. In March 1985 a conversation with Sea Containers was closed by Sea Containers.

Sir Julian Ridsdale: Does my hon. Friend agree that one of the reasons for the breaking off of the negotiations was the absurd price of £7·24 million asked by Harwich Terminal Holdings for the work that it had done beforehand?

Mr. McQuarrie: I am grateful to my hon. Friend for drawing that to my attention. It is an important matter.

Mr. Bill Walker: My hon. Friend has considerable experience of the construction industry and he knows what happens when work is partially completed. He will be aware of the importance of technical information. Is it his experience that one starts negotiations from a bargaining position and that no one expects the first bargaining position to be accepted?

Mr. McQuarrie: I am grateful to my hon. Friend for that intervention.
I reply to my hon. Friend the Member for Harwich by saying that the original offer, on the advice of Hambros bank, was to ask for compensation of £7·24 million. Sea Containers did not even entertain discussions with Earlpar, the development company, because the conversations which commenced in March 1985 were closed by Sea Containers without any offer of compensation.
In July 1985, contact was resumed and there was a meeting with Mr. James Sherwood at which HIT was invited to make new proposals. In November 1985 proposals were put forward by HIT, but Mr. Sherwood did not respond. It is unfair to suggest that HIT asked for £7·24 million—a request which was thrown out by Sea Containers and Mr. James Sherwood—without making any alternative proposal. Had there been some form of negotiation on meaningful terms of a financial return to HIT for nearly 15 years of work, we would not be discussing these important issues tonight.
Sea Containers found everything necessary for partial reclamation to begin when it took over, and at no expense to itself. It also found a library of technical feasibility studies which over the years Earlpar had made freely available to British Railways Board's engineers as well as to the Harwich harbour authority and the Anglian water authority. In the light of no fewer than five demonstrations by the British Railways Board of its manifest intention that

the Earlpar project should go ahead, eventually Earlpar placed no embargo on material, nor thought of stressing its own copyright.
I turn to the company's contact with Sea Containers. Following the takeover of Sealink, Earlpar made contact with Sea Containers to discuss collaboration on the outright sale of its company and its Act; the rights to the studies conducted over a period of nearly 15 years; and the score or so of consents that Earlpar had obtained. It was advised by its merchant banker, as my hon. Friend the Member for Harwich has said, to propose a figure of £7·24 million as compensation for nearly 15 years of work. That was rejected by Sea Containers in the spring of 1985, and the matter has gone no further.

Sir Julian Ridsdale: I think my hon. Friend is wrong in saying that the matter has gone no further. I said when I addressed the House that at this stage negotiations have been offered at top level between the two companies. The offer was made that the negotiations should take place tomorrow. Does my hon. Friend agree that the issue should be taken up in Committee and that it should not be used as a reason for opposing Second Reading?

Mr. McQuarrie: I am sure that my hon. Friend does not want to mislead the House. Perhaps he is not in possession of the information with which I have been supplied. I do not suggest that he is wrong or that I am wrong. The information that has been conveyed to me, no later than this afternoon—indeed, earlier this evening—is to the effect that negotiations are not in hand, not even with the junior members of Sea Containers. If my hon. Friend can give the House positive information on who is conducting the negotiations and which member of HIT or Earlpar is involved in them, it will be for the benefit of the House to hear it.

Sir Julian Ridsdale: I have in my hand a letter dated 28 April 1986 from Sherwoods. The final sentence reads:
Should your clients wish to pursue this, it is suggested that they make an approach to Mr. Sherwood or Mr. Bray direct.

Mr. McQuarrie: I shall address myself to that alleged letter in due course. I can tell the House that as far as I am concerned there is no such letter in existence. That is the position of Earlpar.

Mr. Fairbairn: On a point of order, Mr. Deputy Speaker. If, during the course of Second Reading of a private Bill, a company had offered a financial inducement to those who are resisting it to resist, is that not improper?

Mr. Deputy Speaker (Sir Paul Dean): This matter can legitimately be debated on Second Reading, but it is not a matter for the Chair.

Mr. McQuarrie: I hope that I have not got my hon. and learned Friend wrong. I hope that he is not suggesting that any negotiation between the parties, even at this late stage, is irregular. My hon. Friend the Member for Harwich has said that he is in possession of a letter, but I can tell him that Lord Lauderdale, to whom the hon. Member for Fife, Central referred, has told me that no such letter exists as far as his organisation is concerned. I must take the word of the noble Lord who has had so much to do with the Bill.

Sir Julian Ridsdale: That shows how much better this could have been dealt with, if my hon. Friend had allowed it, in Committee rather than on Second Reading. I am


pleased to say that I have this letter, dated 28 April, which is in reply to a letter of 28 April from Dyson Bell and Co, acting for Lord Lauderdale.

Mr. McQuarrie: I hope that there will be a little time for my hon. Friend to respond to some of the points that have been raised, so that he can tell the House what the letter says about financial compensation to Earlpar. Some of us feel that an injustice has been done to a company that has spent nearly 15 years developing something and then, because some big brother has taken over the place, has been thrown out without any question of compensation. That simply is not on, and I regret to say to my hon. Friend the Member for Harwich that that is the pertinent point that I am trying to illustrate.

Mr. Fairbairn: This has now been going on for a long time. Can my hon. Friend speculate on how it has come to pass that a letter, offering to negotiate, came from the other side on 28 April which, if I am not mistaken, is tonight?

Mr. McQuarrie: I am grateful for that point. The letter is in response to a request for negotiations made several weeks ago. As soon as the names went down on the blocking motion, Sea Containers finally saw fit to make a sign to Lord Lauderdale and his colleagues that it wished to have talks. It did not get beyond that. I know that my colleagues and other hon. Members are anxious to speak, but the case must be proven, and Mr. Sherwood has an obligation to Earlpar that he has not so far honoured.
Mr. Sherwood and his assistant, Mr. David Bray, met Earlpar's directors in July 1985 for a further discussion. Mr. Sherwood spoke of the possibility of a new private Bill, and he was warned that it was certain to run into difficulties, if only because of its conflict with the present Act. He finished by inviting Earlpar to make a new proposal, which it did. In November, Mr. Bray repeated the invitation to the chairman of Earlpar's holding company, Mr. Anthony Reardon-Smith, to write in with his suggestions for discussions with Sealink that week.
In the meantime, Earlpar has received approaches from a British shipping company of worldwide standing, eager to develop a container facility at the port, eager to do business through Earlpar, and able to play a significant part in funding. What is more, it is eager to give employment in an area which, as my hon. Friend the Member for Harwich has said, has high unemployment.
Sealink's plan, as explained to Earlpar at the meeting in July and as is implicit in the Bill, is to develop the harbour works piecemeal, working eastwards from Parkeston quay as user commitments become available. As Sealink has lately been losing user commitments to Felixstowe, the introduction of a substantial potential user should have been of interest, as well as being a sign of Earlpar's continued readiness to co-operate on reasonable terms.
Earlpar sent proposals on 28 November 1985 to Mr. Bray, from whom it received no acknowledgement, let alone a reply. In recent weeks, since a petition against the Bill was deposited, Sealink has said that the proposals have been answered by telephone—not by a letter, in a good business way—rejecting Earlpar's proposals. Earlpar has said that it can only say that that is the case. It had no communication from Mr. Bray until a message was passed through Sealink's parliamentary agents a week ago, after a proposal put forward in November 1985.
Let me now summarise my conclusions. It was Earlpar that convinced British Rail and then Sealink of the feasibility of the scheme. Earlpar has provided, and owns, the critical engineering studies enabling the project to go forward. The company's powers have another six years to run. Thanks to Earlpar's initiatives, one third of the bay has been reclaimed at no cost to Sealink. In turn, that may have modified the capital cost of the reclamation and development project by up to 30 per cent.
The historic obstacle to Earlpar's scheme—the requirement for section 9 consent, based on a bankable contractual user commitment for a harbour, as yet unbuilt, on land, as yet unclaimed—no longer obtains, because Earlpar has done a first-class job. Earlpar has a sound and potential user, eager to do business on starting the port development and supplied with ample resources.
No doubt the promoters have ample resources of their own, but the very range of their interests could be an argument against coherent supervision. Their attitude to the matter is likely to be distracted by association with a mixed bag of divergent interests. Apart from five other Sealink harbours—Stranraer, Heysham, Holyhead, Newhaven and Folkestone—and some 12 ferry routes, they include entry to the leisure markets with the Venice-Simplon Orient Express, ownership of several former British Rail hotels, as well as one in Venice, a protect for a Peking-Hong Kong version of the Orient Express, not to say tourist steamers on Lake Windermere, the "Gourmet's Discriminating Guide to London" and the Illustrated London News.
This resort to the private Bill procedure to secure repeal of an Act enjoying another six years to run should not be permitted as long as the company that has spent nearly 15 years developing the project has not been compensated. My hon. Friend the Member for Harwich must give us a firm guarantee that positive steps will be taken. I do not consider that the Committee is the place for that undertaking to be given. It must be given on the Floor of the House. If he does not have the information, I ask him to endeavour to get it from wherever it is available. Unless he can give us that information, the Bill should be rejected out of hand.

The Parliamentary Under-Secretary of State for Transport (Mr. Michael Spicer): At this point I shall briefly tell the House the Government's view on the Bill. It is the traditional view for all Bills of this type.
The Government have considered the contents of the Bill and have no objection to the powers sought by Sealink Harbours Ltd. A few minor drafting points have been raised in correspondence with the promoters, but I have no reason to believe that they will not be cleared up satisfactorily.
The debate has already shown that the issue is not without controversy. The speech of the hon. Member for Fife, Central (Mr. Hamilton) and the intervention of my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie) have certainly left that in no doubt. As has been pointed out, there are four petitioners outstanding against the Bill. The Government's position, which is traditional, is that they will have the opportunity to present their objections to the Private Bill Committee. The Committee will undertake the function given to it by Parliament to examine in detail the issues involved, with the advantage of being able to hear expert evidence.
Therefore, as is traditional for the Government in the circumstances, I recommend to the House that the Bill be given a Second Reading, and—

Mr. McQuarrie: I am surprised to hear my hon. Friend say that the Government are supporting a private Bill. Surely the Government are supposed to stand apart from private legislation.

Mr. Spicer: Perhaps I did not stress it sufficiently clearly, or perhaps my hon. Friend did not hear me say, that the Government, as is traditional with private Bills, believe that the matter should go to the Private Bill Committee which, as my hon. Friend knows, has substantial powers to amend the Bill. The Government take the view—to that extent they are neutral—that that is the best forum for private Bills to be discussed in detail.

Mr. Bill Walker: Have my hon. Friend the Minister and the Department of Transport had an opportunity to consider in depth the implication for private legislation if subsequent legislation to repeal Acts which give companies powers is introduced? If so, what is the Department's view?

Mr. Spicer: The Department is not responsible for the business of the House. As my hon. Friend knows, the matter is under consideration. I am advised that the Committee could consider that point. It has the powers to do so. I have listened with great interest to the debate about whether this is the best procedure, but it is right for the Department to have a view on the matter.

Mr. Fairbairn: Surely even the Department of Transport must occasionally speak to the Department of Trade and Industry. Is it not horrified if General Motors, as an American company, is not to be allowed to interfere with our beloved British Land Rover, and that an American company is to be allowed to interfere with a company created in 1972? It is not that we are handing something away. We are revoking an Act of Parliament which gives to a British company something that an American company wants an Act of Parliament to revoke.

Mr. Spicer: My hon. and learned Friend makes an interesting point which he will undoubtedly make to the Committee. Parliament has laid down that the matter should go to a Private Bill Committee, and that is the only point that I seek to make. Because of that view which is traditionally taken by the Government, the Government believe that the Bill should be given a Second Reading.

Mr. Roger Stott: I, too, wish to make a short intervention in the family argument on the Conservative Benches. It is clear who has drawn the short straw.
It has been interesting to listen to the proceedings thus far, especially the intervention of the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) in his gesture of contrived anger about what is going on between an American company and a British company. I participated in the proceedings on the Bill which became the Transport Act 1981. My hon. Friends and I told the then Minister that something like this might happen. I did not see then the massed ranks of the Conservative party opposing the privatisation of Sealink, the Sealink Harbours and British Rail interests in the matter. I shall

come to that in a moment. This evening I do not intend to arbitrate in the row between Earlpar and Sealink—two well-heeled, rich companies which have their advocates in the Tory party.
It is right to say that the private Bill procedure needs to be examined. My hon. Friend the Member for Fife, Central (Mr. Hamilton) outlined many points with which most hon. Members agree. It is anachronistic that we should proceed in this way during the second half of the 20th century. Parliament needs to examine its procedures more closely in future.
The question about section 9 of the Harbours Act 1964 was raised by the hon. Member for Banff and Buchan (Mr. McQuarrie), who duly read his brief word for word, and my hon. Friend the Member for Fife, Central. That particular section was removed by statutory instrument in an hour and a half's debate in the House some time ago. I spoke against its removal because it was one piece of legislation which would prevent piecemeal port development from taking place.
We in the Labour party are worried that we have no ports policy of any description. I make that point every time I stand at the Dispatch Box. The removal of section 9 makes possible piecemeal ports development all over the place without regard to the United Kingdom's total tonnage capacity, to the damage that it may do to other existing ports or to the proper considerations of a marine and port policy. My arguments on that are firmly on the record, so I need not repeat them now.
As I understand it, the arguments are not the same as they were when we were opposing the development of Felixstowe, which we did for many reasons. First, Felixstowe was being built on a site of outstanding natural beauty. I do not think that that is so in this case. Secondly, the site of Felixstowe was an area of special scientific interest. My hon. Friends deployed those two arguments against the extension of Felixstowe.
The third argument, which I used, was about overcapacity in the ports industry. There is too much capacity, and any further piecemeal development, no matter where it occurs, is bound to have a knock-on effect with other United Kingdom ports. That is why we need a proper ports policy which will take into account the capacity of containerisation, and can designate where ports are and are not developed. If we keep developing the east coast, it will mean west coast closures and Channel port problems. [Interruption.] The hon. Member for Bury St. Edmunds (Sir E. Griffiths) says that that is not so, but he knows as well as I do of the difficulties that may occur at Ipswich because of the development at Felixstowe. I do not wish to provoke him to his feet because I do not wish to say much more. Nevertheless, it is worth bearing in mind that we do not have a proper ports policy, and we do not seem to know where we are going.
Mr. Sherwood who owns Sea Containers and Sealink is a promoter of the Channel tunnel—strange bedfellows. His scheme did not find favour, but one did—the rail-only Channel Tunnel Group scheme. The freight shipped through the Channel tunnel on railway lines will affect the amount of freight likely to pass through British ports. We should carefully consider whether to give permission to further harbour developments while we bear in mind that the Channel tunnel will be built.
I do not object to the Bill being given a Second Reading. Hon. Members will have their day in Committee


when all the points of the hon. Member for Harwich (Sir J. Ridsdale) will be discussed. It is sad that we do not have a clear policy on our direction in the ports industry.

Mr. Fairbairn: What is the Labour party's policy? What is its policy for Perth harbour?

Mr. Stott: It is clear that the hon. and learned Gentleman does not read Labour party publications or documents on transport policy. He has not read the latest publication in which we explain a series of options. We are developing a strategy for the ports industry. The hon. and learned Gentleman appears to be concerned, but I do not know where he was late on that night when we discussed the statutory instrument that removed section 9 of the Harbours Act 1964. If he felt as I do, he should have supported my hon. Friends and me in arguing for its retention.
If section 9 had been retained it would not have been possible to undertake these developments without requiring the Secretary of State to give his approval. Presumably, the Secretary of State would give his approval only if he thought that the development of a particular harbour was in the national interest, not in the interest merely of the promoter calling for the development of that harbour. Harbour development should be conducted not on a piecemeal basis but on a national basis first. On the east coast, the two big fat cats of Harwich and Felixstowe are fighting it out in the interests of no one but themselves.

Sir Eldon Griffiths: Until the interventions of my hon. Friend the Under-Secretary of State and the hon. Member for Wigan (Mr. Stott), the debate had been a contest between Essex and Scotland. I am a Suffolk Member with a riparian interest, as my hon. Friend the Member for Harwich (Sir J. Ridsdale) knows, because Felixstowe and Ipswich are Suffolk ports and share the same haven with Harwich. I have taken a close interest in the matter and at the weekend read with interest the promoter's arguments and some of the arguments of the petitioners. We have been treated to some views that do not appear in any petition against the Bill but reflect the concerns of those at Earlpar who previously were involved in the engineering works in the Bathgate area.
I support the Bill and urge the House to give it a Second Reading. I stand firmly with my hon. Friend the Member for Harwich, who put the matter, as is his custom, succinctly and well. I support the Bill for local reasons. Harwich, with its unemployment level, needs investment and will benefit from the jobs created by the measure. It is no small matter that the legislation proposes total investment of about £100 million, of which about £33 million will be on construction. That is bound to result in hundreds of jobs, which must be something of which the House will approve. That is more important than the debate about who gets what with respect to Earlpar and the promoters.

Mr. Fairbairn: Will my hon. Friend give way?

Sir Eldon Griffiths: I shall give way, but I want to make a relatively serious and short speech. I do not want to become too involved in legalistics with my hon. and learned Friend.

Mr. Fairbairn: I shall not be legalistic. My hon. Friend claims that expenditure of £100 million is proposed

in the legislation. I took the trouble to read the Bill and it makes no such proposal. Where does my hon. Friend suggest that that proposal is made?

Sir Eldon Griffiths: I did not say that and, if my hon. and learned Friend had been listening, he would not have imagined it. I said that the project involved expenditure of about £100 million. I am in favour of that.
I am in favour of the Bill for local reasons. I say, as one who was a transport Minister for a number of years, that, if British Rail had continued to be the manager of the port of Harwich, it would not have achieved the investment level now proposed. I have nothing against British Rail, but its management of the port of Harwich was not good enough. I, for one, am glad that Sealink has taken over the facilities. That is part of our privatisation policy, which I believe is successful. I am glad that private enterprise is providing for Harwich what public enterprise so lamentably failed to do for so long.
I support the Bill also because it is right to have competition among the haven ports. The port of Ipswich is efficient in handling relatively small, specialist cargoes, and I know it well. The port has developed and its progress is assured, especially with the new highway system that the Government have managed to provide for it and the other haven ports.
By any measure, Felixstowe is one of our great national success stories. It has come from nothing in the 1953 floods to being arguably the most efficient port in western Europe. It is a jewel in the east Anglian crown. Felixstowe's progress, when the private Bill on Felixstowe is supported by the House, will further the improvement of our ports industry in the haven area. It is right that there should be competition. As Harwich, too, comes forward, the industries and businesses of east Anglia will have a choice and an opportunity to use Ipswich, Felixstowe or Harwich. We shall have riches in our ports industry, and that will be good.
Felixstowe has raised some objections. It is concerned about whether there should be a seawall or a bung. The promoters say that shelving sand will be sufficient. I do not know the answer, but I am sure that the two ports will work together intelligently to find a sensible answer. I hope that the Committee will form a view on the best engineering solution to that problem. I have read with interest the views of those who wish to look after Gas House creek. That is a perfectly proper matter for the Committee to consider, as I am sure it will. I believe that proper provision will be made.
I am not impressed by the arguments of Mrs. Cullen, whose petition was disallowed by the Committee referees. I listened carefully to the hon. Member for Fife, Central (Mr. Hamilton). I share his concern about the need to modernise our private Bill procedure. I have sat on enough private Bill Committees, and avoided sitting on more, as the House will understand, to be well aware of the disadvantages of that procedure. I hope that when the House considers private Bill procedure it will not throw out the baby with the bath water because many of the private Bill Committees achieve a profound examination of matters that it would be impossible for us to handle on the Floor of the House. I believe that on balance it is a good procedure and should be changed only cautiously and sparingly. The detailed questions about the Bill can and will be handled intelligently either by negotiation or in Committee or both.
Above all, I support the Bill because it is in the national interest to help the development of East Anglia. In the previous century East Anglia was a forgotten region. It was cut off by the Fens and by poor transport. Today it is Britain's new frontier. It is a fortunate area in that our trade has turned around to the European ports. I believe that 58 per cent. of our trade is with the European Economic Community. Felixstowe, Ipswich and Harwich have certainly benefited from that. East Anglia is also fortunate in that the great research and development centre of Cambridge is beginning to spill over high-tech and biotech into our market towns and provide new, modern and competitive industries. We are also fortunate in that as Stansted develops to the south it will provide us with a new regional airport. I am not in favour of a large Stansted. I have opposed it. However, a modest development at Stansted will complement the tremendous development of the ports and the benefits of academia coming from Cambridge university into our regions. It must be right in a developing region such as East Anglia that the ports industry should go ahead to assist British exports.
I am glad that the hon. Member for Wigan ended by taking a neutral view about the Bill and commending the House to give it a Second Reading so that it can be considered in greater detail in Committee. During my time as a transport Minister, when I had a particular responsibility for ports, I put large sums of Harbours Act money into two of our main west coast ports—Liverpool and Bristol. There was about £45 million for the west dock in Bristol, which was much more money in those days than it is today, and, as I recall, I put a further £40 million into Liverpool to build the new Seaforth dock. There was tangible evidence of investment in the western ports in the belief that they would benefit from modernisation. I am sorry to say that in Liverpool most of it was thrown away by restrictive practices, bad management and the general mood of the country looking more and more to the east. Similarly, although the west dock in Bristol has moved forward—you were very conscious, Mr. Deputy Speaker, at the time of the development in that area—I am not convinced that the money in question would not have been better spent if it had been put into the modernisation of the port of London and perhaps of Felixstowe, too.
Any national ports policy has to take account of the fact that our trade is now to the east. The great world girdling container vessels, which will stop only once in north-west Europe, must have a port in this country where we can handle the goods with speed and efficiency so that they are attracted to come here and not simply to Rotterdam. On a national level, there is only one place where those ports can be provided—that is, on the North sea where they can compete with Rotterdam. It is an unfortunate fact of geography—I say this as someone who was born and grew up in the north-west and who wrote his first essay about the great docks of Liverpool when I was a schoolboy—that our economic structure has altered. We now look more to the east than to the west. Therefore, any national ports policy must comprehend the building of modern and efficient ports within the East Anglian region.
I should like to make this suggestion. Like many others, I have toiled on private Bill Committees. I think, if I am not mistaken, that the first that I sat on, which was one of the longest, concerned your constituency, Mr. Deputy

Speaker. It was about the building of a steel jetty from south Wells in such a fashion that it would have intruded on the maritime environment of the area that you so elegantly represent, Mr. Deputy Speaker. In the event, it was one of the many private Bills which, although passed, bit the dust, and the jetty was not proceeded with. You were one of those who opposed it, Mr. Deputy Speaker.
Private Bill Committees are not the easiest and the best way to proceed, but the matters which have been fairly raised by my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie), and which no doubt will be raised by other hon. Members who have still to speak, concern Earlpar's problems. There is an issue. Some compensation should be paid. But surely this is a matter for negotiation between the firms. It is not strictly a matter to be dealt with on the Floor of the House. The Committee is the best place to do it; the two firms are the best people to do it. I hope very much that justice will be done between them, but that is no reason for opposing the Second Reading of the Bill in the House.

Mr. Nicholas Fairbairn: I should like to start from the point with which my hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths) finished. He said that there is no reason for opposing a Bill on the basis of a failed negotiation. I cannot agree with him at all. He represents the Police Federation and constantly speaks of the rights and morals of law and order, so I find that a strange point for him of all people to make.

Sir Eldon Griffiths: This is not criminal law. It is civil law.

Mr. Fairbairn: No. Although my hon. Friend may not know it, the civil law also starts from a moral stance. That is the moral stance of equality. It is exactly the same in the civil law as in the criminal law. The point is that there should not be handed to one party a weapon that makes it impossible for the other party to obtain its rights. That is the position that I find so constitutionally unacceptable about the Bill.
I find it extraordinary that Parliament, by whatever procedure—but, in this case, by a private procedure—should have passed an Act of Parliament in 1972 which gives this power to a specific company. I shall read part of the Act to demonstrate what Parliament said. It was
An Act to empower Earlpar Development Company Limited to construct and operate works at Bath Side Bay, Harwich; and for other purposes.
I share this feeling with many hon. Members, including the hon. Member for Fife, Central (Mr. Hamilton), for whom, as he knows, I have a warm regard and with whom, oddly enough, I happen to agree on many matters. That may not be something which, in the evening of his time here, he would wish to be on his curriculum vitae. I am sorry, but it is something that will have to be written in. I agree; I find the procedure extraordinary. Nevertheless, Parliament had the capacity to grant to a company an Act of Parliament. After all, let us not forget that the business before the House, before 7 o'clock, was about empowering the shipbuilding industry to borrow hundreds of millions of pounds. That Bill was on two sides of a sheet of paper. We are dealing with an Act of Parliament, passed in 1972, which has 31 pages, 36 clauses, and a schedule. If Parliament took the trouble to pass an Act in 1972, granting powers to the Earlpar Development Company to


construct and operate works at Bath Side Bay, Harwich; and for other purposes.
which extend to 1992, it is a strange constitutional abuse of procedure that someone else should ask Parliament to remove those powers.
One cannot leave something in a will and then say, "By the way, I am terribly sorry, but my second cousin has come along and asked that the will be cancelled." We have given powers to the company to do certain things until 1992. Parliament cannot come along now and say, "We are terribly sorry, old chap. We have a big brother who wants to take those powers from you without compensation."
I asked my hon. Friend the Member for Harwich (Sir J. Ridsdale) whether there had been any negotiation as his reply might have cleared my mind. I asked him furthermore whether, in his view, the bargaining position in the negotiations would be altered by the passing of the Second Reading of the Bill. My hon. Friend could not answer either question, but he said in answer to one of my hon. Friends that a letter, which offered negotiations, had been sent on 28 April which, if I am not mistaken, is today.
We have heard in several of the contributions to the debate that there was a moment at which Earlpar Development Company, on the advice of its financial advisers, suggested that £7·24 million was the proper price to pay for the work which had hitherto been done and would be of benefit to those who inherited.
I do not know whether that figure is correct, whether it is an exaggerated price, absurdly high or absurdly low. I do not know how that figure relates to the work and I do not wish to develop that matter. However, if I am told that someone has seen my name, the name of the hon. Member for Fife, Central, the name of my hon. Friend the Member for Tayside, North (Mr. Walker), the name of my hon. Friend the Member for Edinburgh, Central (Mr. Fletcher) or the name of my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie) on the Order Paper stating that the Second Reading should be in six months time and a letter arrives on that day saying that negotiations will take place, I can only say that nothing would be or could be more equitable. Perhaps my hon. Friend the Member for Harwich could give me a satisfactory explanation—and I will give way if he wishes to do so—why, on 28 April, negotiations were suddenly offered.
As a lawyer I have always represented the law of Scotland and, without offending any Front Bench Members or any other Member of the House, let me say that that law has a more equitable and also a more sceptical approach to equity. I find it very odd that an offer should be made for negotiation on the day when it looked as if someone might block the ability to extinguish the rights of the other party to have any claim. If the rights granted by Parliament in 1972—these are the rights, the absolute rights, the only rights under this complicated Act passed on 9 August 1972—are extinguished or prospectively extinguished by the passing of this Second Reading, the letter of intent of today, so belatedly entered into, would immediately be withdrawn and not acted on.

Sir Eldon Griffiths: I appreciate my hon. and learned Friend's apprehension and I, too, would be most unhappy if this Second Reading were, as it were, to close the door to the negotiation of the proper compensation that I think all of us would wish to achieve. But does not he accept that

a Committee of the House can, if it is not satisfied with the arrangements that are proposed, throw out the Bill and the promoters will be back where they started? Therefore, there is no question of a prospective extinguishment of the rights of the original developers; rather it is a matter of whether my hon. and learned Friend is prepared to trust a Committee of the House to arrive at a just approach.

Mr. Fairbairn: I am interested in that concept of jurisprudence. I find it extraordinary, because if there had ever been any genuine intention to negotiate, a letter saying so would not have been dated today. It would have been proceeded with months ago, indeed, more than a year ago. The company would have said, "We are going to take over from you an asset." Indeed, it would not have needed a private procedure at all; it could have been bought. Therefore, I am sorry to say to my hon. Friend that I do not accept that concept at all.
Is my hon. Friend seriously saying to the House that a Committee will throw out a private Bill? We do not know who will be the members of the Committee. Is he saying that they will form a sort of civil court of their own and that, if they are not satisfied that there has been a proper civil award for work done and contractual obligations due, they will throw out the Bill? I have never heard such an extraordinary concept.
I know that we are the High Court of Parliament, but we are a High Court of Parliament that does not perform the allotment or aggregation of civil claims. When the High Court of Parliament looks like blocking a Bill for six months to concentrate the mind, in the same way that hanging does, I cannot understand why my hon. Friend should suggest that all of a sudden a Committee of the House of Commons, composed of we know not whom, should say, "We shall throw out the Bill because we are not satisfied that a civil claim, with which we have no right to deal, is not satisfactory." I have never heard such an extraordinary concept.
It is inequitable and wrong that a Bill of Parliament under private procedure should be allowed to deprive another company, which has done all the work, of its just claim and that another company, if this Bill were to be enacted, should get all the benefit. That is the most extraordinary concept of jurisprudence that I have ever heard.
If my hon. Friend genuinely means that, why has my hon. Friend the Member for Harwich been unable to answer my question about whether, if we pass the Second Reading tonight, the negotiating position of those in whose favour the Act was passed in 1972 will be improved or worsened by the passing of Second Reading?

Sir Eldon Griffiths: It will be exactly the same.

Mr. Fairbairn: My hon. Friend says that it is exactly the same. I do not think that it is exactly the same. As I am a Jacobite episcopalian, who thus has a certain scepticism about motivation, when I see that the offer to treat is dated 28 April after it had been seen that there was opposition, I say to myself, "Exactly the same, eh?" Let us suppose that none of us had put down our names.

Sir Julian Ridsdale: rose—

Mr. Fairbairn: Let us suppose that there was no question of this matter being delayed for six months. Would people say exactly the same?

Sir Julian Ridsdale: I am grateful to my hon. and learned Friend for giving way, particularly because he is labouring the point that this letter is dated 28 April and that this is the date when negotiations have been carried on. I have in my hand a letter from Sherwoods about the Bill which is dated 14 April. It says:
When we considered with you at the telephone today a possible date for the proposed meeting to discuss the issue raised in your client's petition against this Bill, it appeared that the three alternative dates offered by the promoters would not be convenient. We have since obtained further instructions and are now able to offer the afternoon of Tuesday the 29th April. Please let us know whether a meeting in our offices at, say, 2.30 on that date would be acceptable.

Mr. Fairbairn: I am most obliged to my hon. Friend. I was hoping that an hon. Member would raise that date, too. It was the date when the hon. Member for Fife, Central was joined by Conservative Members on the motion that this Bill should not be considered for six months. I was waiting for the corroboration and was frightened that it would not come. But there it is. We have been persuaded that, because of this matter, an offer to treat has been made.

Mr. Sayeed: Will my hon. and learned Friend give way?

Mr. Fairbairn: In a moment.
When I examine witnesses, I try to understand the motivation of those who give evidence before me. When on the day that it is seen that there may be opposition—14 April—somebody sends a letter and when on the date of the Bill's Second Reading another letter is sent about dates being awkward, all I can say is that in six months' time a date when it is not awkward may have been found, when it would be more convenient not to snatch the baggage. I am sorry to say that I find the evidence ever more convincing that this is an attempt to steal the baggage. I shall develop that point later when I look at both Bills, having first given way to my hon. Friend.

Mr. Sayeed: I am grateful to my hon. and learned Friend for giving way. I am sorry that he appears to demonstrate a lack of trust in a Committee of the House. He suggests that a Committee is not permitted to attach conditions to a Bill. However, I have already sat for 24 days on the Felixstowe Dock and Railway Bill. The proceedings have not yet been concluded, one of the reasons being that although we are prepared to support the Bill in principle we have attached conditions and the Chairman will not sign the Bill until those conditions are met. A Committee of this House, which I believe all right hon. and hon. Members should be able to trust, should be able to attach conditions that ensure an equitable agreement between the promoters and the objectors to the Bill.

Mr. Fairbairn: It has been suggested, I think, that I would not trust a Committee. I would trust Committees to do many things, although I am not sure that I am willing to list them. However, I do not expect a Committee to say that a Bill will be granted provided that the compensation that should be paid for the extinction of the 1972 Act is £122,000,846, £648,000 or whatever. It would be meaningless and inappropriate for a Committee to say, "And we expect you to come to an equitable agreement."
I have served on many Committees, and on perhaps more than my hon. Friend the Member for Bristol, East

(Mr. Sayeed). I am confident, particularly given our eccentric procedures, that they frequently reach a decision that is quite different from that intended by any of those serving on them. Therefore, without casting any aspersions on the honour and excellence of our Committees, I would not trust a Committee to come to an equitable conclusion when one party hopes to take from the other powers granted to it by an Act of Parliament until 1992.
It is not right that this procedure should be used by one company to take from another powers granted to it by Parliament. That is fundamentally objectionable. I might also find it fundamentally objectionable that Parliament should grant the first company any powers, but that is another matter. However, I am certain that Parliament cannot grant rights to one company in a full Act of Parliament and then remove those same powers in an Act of Parliament that makes no reference to the previous Act, other than occasionally to imitate its language and to refer in schedule 2 to
1972 c. xxxvi Bath Side Bay The whole Act. Development Act 1972
When I studied jurisprudence, private international law and constitutional law, I became aware that one could not grant powers and rights under a private Act—and possibly even under a public Act—and then pass an Act that repeals the first Act without any reference to compensation for the rights under it. Something cannot be confiscated without any compensation for it, and that is borne out by nationalisation Acts, Appropriation Acts and even by compulsory purchase orders. Whether an Act is private, or is a private Act that involves something such as compulsory purchase, as was the case with the Forth Bridge and Tay Bridge Acts, compensation is provided for the powers granted against those involved. But where is there any mention of compensation in this Bill? Where does it demonstrate the extinction of rights granted by Parliament in 1972? Hon. Members may say that this is a private family row, and may ask what Scotland has to do with East Anglia. The answer is that Parliament is a place of principle. It is astonishing that anybody should agree, in the wake of the recent idiotic political, anti-American little-Englandism, that an American company should be allowed to come to Parliament to take away from a British company, whose managing director is Scottish—that does not matter—powers granted to it without any reference to compensation.
Some say that the Committee can always deal with that, but this is the Chamber in which our rights are held. I do not believe that the hon. Members for Wigan (Mr. Stott) and for Fife, Central believe that if one loses in this Chamber one's ideas are safe in the next. As a lawyer I do not say to my client, "It does not matter if you lose in the first court because there is always the appeal court." That is not the order of events. If one does not win in the first court, one's chances thereafter are extremely doubtful. It is a question of tossing the coin. The principle must be decided here and not left to some unknown and undecided Committee, the composition of which we do not know.
Comparing the Act and the Bill, I am torn between two concepts. The first is that the Bill is a crib and the second is that it is a bad crib. The reason is that the powers granted under the 1972 Act which empower Earlpar Development Company Ltd. to construct and operate works at Bath Side


bay are to be snatched from that company to allow Sealink Harbours Ltd. to construct works and to acquire land at Bath Side bay. The powers are approximately the same. The Bill also extends the limits of jurisdiction to Parkeston quay. Slightly different language is used, but we are talking about a snatch.
We are talking about a strange concept, because in private legislation all the suppositions and premises are stated, but they are in question. One states one's views and the Bill is the end result. It is interesting to note the comparisons between the two measures. The 1972 measure proceeded on the basis of a genuine proposition. It was said that the company had been formed for certain purposes and that
existing port facilities and allied services—in the counties of Essex and East Suffolk are insufficient for present and future needs.
That proposition is not contained in the Bill. The Act stated:
it would be of national benefit and local advantage if improved and additional facilities and services were provided".
That proposition is not in the Bill. If the hon. Member for Wigan believes in the fantasy concept of a national ports policy, it may well start off by saying that in the counties of Suffolk and Essex the ports are
insufficient for present and future needs and it would be of national benefit and local advantage if improved and additional facilities and services were provided:
To that extent, the 1972 Act provided a marvellous blueprint for a national ports policy. I notice that the Harwich Parkeston Quay Bill makes no claim upon either local requirements or national interests. To that extent, I hope I may get a nod of recognition from the hon. Member for Blaydon (Mr. McWilliam) for a policy I do not approve of—that is, if he is not too engaged with his hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), whose interest in this matter I know to be crucial.
It is important to compare the two pieces of legislation. When we read the meat of the legislation in section 2 we understand what the authorised works are. In the original Act, the authorised works meant
works described in and authorised by section 4 of this Act.
In the new Bill it means
the works and operations authorised by section 4 of this Act.
In other words, this Bill is a crib of the original Act to thieve the benefits. That thieving process was suddenly discovered, apparently, through a matter of negotiations 14 days ago and again today.
The company under the original Act meant Earlpar Development Company. The company under the new Bill means Sealink Harbours Limited. If that is not plain downright theft by a company which decided to negotiate when it realised that there were some people who proposed that Second Reading should not happen for another six months, I do not understand what brought it to the wisdom of negotiation so coincidentally 14 days ago, and when another letter went out on this very day because the dates were not convenient—the day of the Second Reading.
There are many matters which are imitated. One is not imitated and I would be interested to learn from the winding-up speech what makes the difference. In section 2(3) of the original Act, there is a phrase of some importance:
All directions, distances, lengths and widths stated in any description of works, powers or lands shall be construed as if the words 'or thereabouts' were inserted after each such direction, distance, length and width".

If one considers the new Bill, which for once does not plagiarise the original Act, it states under clause 2(2):
All directions, distances and lengths stated in any description of works, powers or lands shall be construed as if the words 'or thereabouts' were inserted after each such direction, distance and length.
I do not know whether this is a one-dimensional scheme which is being proposed under the Harwich Parkeston Quay Bill.
I should like to know how the concept of width disappears in measurement, or are we to take it that the Committee will be composed of philosopher kings? We are told, "Leave it to them." It is like Socrates' republic. It was a marvellous idea, but they could not find the philosopher kings to put it into practice. The Committee is to work out compensation and equity and will say that this is all the most marvellous concept that the world has ever seen.
In advance of the philosopher kings being selected, how was it thought in the Harwich Parkeston Quay Bill that all directions, distances and lengths stated in any description should be construed as if the words "or thereabouts" should apply to them, but not the width? Width evidently has to be absolute because, under the 1972 Act, it also had to be "or thereabouts".
The Committee which is to have these powers of remarkable insight might be told by Sealink that the pier will be 180 yd long, 60 ft deep and 640 in wide. The Committee might say, "We will not allow the Bill to proceed unless you provide us with a pier which, in a micrometer screw gauge is 640 in wide because, 'or thereabouts' will not do. It will do for depth and it will do for length but it will not do for width."
I understand that the Committee will be able to negotiate in what must be one of the most difficult arbitrations—the worth of the work done by the company. That arbitration is quite outside the powers and rights of any Committee. Nevertheless, it will apparently have to say, "Ah now, come to width, old chap. There is no 'or thereabouts' about that. Unless you can provide your pier sand plan, bunch, munch or bung, or whatever it is, to the amount that we say, you do not get your Act", because the company has not taken the power to say, "or thereabouts".
If I am told that the Committee is to be so wise that it will arbitrate in what would seem to me, if I was given the brief as a Queen's Counsel, an extremely difficult financial negotiation and that it will be able to refuse the Bill if an arbitration which it believes is equitable is not reached, I must ask on what basis it will make that judgment. I should have thought that it would be extremely easy to make that judgment because those who propose the Bill to extinguish rights granted by the 1972 Act will have no reason to negotiate at all.

Sir Julian Ridsdale: As it appears that I shall not be given the opportunity to reply, I should like to tell my hon. and learned Friend that I only wish that Lord Lauderdale had come to me as the Member of Parliament for Harwich who helped him considerably with the 1972 Bill and told me the facts and figures. I would then have been able to arbitrate between him and Sealink. That course was never followed by the noble Lord. I was suddenly confronted by the £7·2 million and by this new Bill. I am anxious to ensure that the sorely needed jobs of my constituents will be there. Some of the things said by Scottish hon. Members are not correct, and I hope that they will have


the confidence to rely on me not only to look after my constituents whose jobs are under threat but also to see that a fair arbitration takes place.

Mr. Fairbairn: I am obliged to my hon. Friend the Member for Harwich, and I take his remarks seriously. My hon. Friend will note that the motion that stands in my name and the names of the hon. Member for Fife, Central (Mr. Hamilton) and of my hon. Friends the Members for Tayside, North (Mr. Walker), Banff and Buchan (Mr. McQuarrie), Edinburgh, Central (Mr. Fletcher) and Southend, East (Mr. Taylor) makes the proposal that Second Reading should be postponed for six months.
There is in Scotland at the moment an arbitration about a hospital. That is a matter of no greater complication than this matter. It is estimated that that arbitration may take 12 years. If my hon. Friend the Member for Harwich thinks that six months is a long time in the life of an arbitration, I must tell him that I do not. I say with the greatest sincerity that it is a short time for any development that might come about in his constituency to provide jobs.
In that six months, if my hon. Friend can reach an equitable agreement after arbitration for work done under powers granted by Parliament which persist for another six years, I will be more than happy when he brings his Bill forward in six months time to do all that I can to ensure that every Scottish company and every asset is directed towards creating work in his constituency. Every hon. Member of whatever party wants to create work in his constituency.
It is not that I do not trust my hon. Friend, but given the history of non-negotiation and sudden negotiation it is clear that there is no real intent to negotiate by those who seek to extinguish the powers granted by Parliament to the Earlpar company. I would not be a party to the Second Reading of any Bill, public or private, that sought to remove powers and rights granted to a party where there was not in the whole Bill any mention of compensation or arbitration.
It may be of interest to my hon. Friend the Member for Harwich to have regard to the 1972 Act in which the matter of arbitration is specifically mentioned. My hon. Friend says that he will use his good offices to arbitrate and at the same time introduces a Bill to extinguish rights granted by Parliament. The Act granting those rights specifically deals with the matter of arbitration. The hon. Member does not mention arbitration, but gives his word as the result of a letter written on the day when those of us who are asking that this matter be postponed for six months happened to put our names down. There was another letter today, but that has not been received by those to whom it was sent because they are taking part in this debate.
I am sorry to say that, notwithstanding all the generosity within my heart, I do not believe the good will of those on behalf of whom my hon. Friend speaks. However, I shall believe in the equity and honour of those on behalf of whom he speaks if tonight we decide that the Bill's Second Reading should be postponed for six months. I do not know the procedures that apply in the consideration of these matters and perhaps the hon. Member for Fife, Central does. However, if we are successful and the Bill is not considered for a further six months, we may come to know within the rules of the House that by chance and coincidence rather than

chastening the matter has been resolved. That might be tomorrow, next week, or in two months' time. If that happens and if there is anything that we can do to hasten the building by one company or the other of the facilities that will provide employment in my hon. Friend's constituency, I am sure that we shall do it.
If my hon. Friend wishes to have employment in his constituency, what is wrong with the contracts that were entered into to undertake developments under the powers given by Parliament in the 1972 Act, which would provide employment in my hon. Friend's constituency? What is so special about employment that is created by Sealink, the American company, and what is so poor about employment by Earlpar?
I do not know what steps my hon. Friend took. He may have been industrious, and, if he was, I shall applaud him. He may have taken steps with the Department of Transport and other Departments to stop all the blocking of attempts by Earlpar to continue its development over the years. If my hon. Friend is so concerned about employment in his constituency, I do not know whether he took those steps. What I do know is that I can see a rogue deal at a great distance.
We are discussing a minor private measure which involves a principle which my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) and others have raised in the House. We have heard much about the patriotism of the British people being shattered. It is a terrible concept that Americans should own a British company or invest in Britain in any way. This is a private measure that seeks to allow an American company that is based in Bermuda to take from a British company based and registered in England—I use "England" in its proper sense, but there is suitable Scottish representation and guidance—powers that have been granted by Parliament, and to do so without compensation. I find it extraordinary that my hon. Friend should propose that the House should approve a measure which goes contrary to all the principles that are held by those on the Government Benches.

Mr. Stott: Capitalism.

Mr. Fairbairn: With the greatest respect to the hon. Gentleman, removing something from somebody by legislation without compensation has never been conceived, even by Socialism, or achieved in the House, and I hope that it will never be, although it is sometimes threatened.
It is contrary to the principles of Conservative Members, and to the concept announced with apparently shattering effect on the Government and Cabinet, that a foreign company based in Bermuda should be in a position to take away from a British company its right to development. My hon. Friend the Member for Bury St. Edmunds may be right in saying that East Anglia is, in some way, the heaven on earth of Great Britain, but that is not the view that I have formed. I thought that Scotland had certain advantages that were rather greater, especially in Perthshire and the port of Perth, which has great capabilities that I hope the hon. Member for Wigan will not forget in his national docks policy.
The English often forget that Scotland also has an east coast. There is no particular advantage in East Anglia that there is not in east Lothian, east Perthshire or east Fife. The greatest European trade, and the cause of Christianity


coming to Scotland in the first place, was the trade between Flanders and Fife. They missed out East Anglia, and did so wisely, if the East Anglians are as perverse as they appear to be in introducing legislation that attempts to remove from those who are granted them by Parliament powers on trade and development, without compensation or without reference to compensation.
It is extraordinary to use a private Bill to attempt to extinguish powers granted by an Act of Parliament merely by referring in schedule 2 to the extinguishing of a whole Act without compensation or justification, extent or reason. There is no question that the work that has been done under the 1972 Act was passed, in good faith and in confidence, to British Rail and by it to Sealink which was, to all intents and purposes, British Rail. That being so, the company should have been rewarded.
Why is it claimed, as I think that it has been by my hon. Friend the Member for Harwich, that some negotiations are available, which were put in prospect when we tabled the motion objecting to the Bill, suggesting that six months is not too long a time to do a little arbitration? If there was no claim by the Earlpar company, Sealink has nothing to fear and, if it has a claim, it is outrageous that Parliament should be asked to extinguish that claim through legislation. That is a constitutional wrong of which the Minister should take account. For Parliament to extinguish a civil claim by legislation is wrong. If there is no civil claim, why is the company negotiating, and why is it trying for an Act of Parliament to extinguish that claim? That is why—

Sir JulianRidsdale: rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put:—

The House divided: Ayes 98, Noes 16.

Division No. 160]
[9.59 pm


AYES


Alexander, Richard
Brandon-Bravo, Martin


Amess, David
Bright, Graham


Atkins, Robert (South Ribbie)
Brooke, Hon Peter


Baker, Nicholas (Dorset N)
Brown, M. (Brigg &amp; Cl'thpes)


Best, Keith
Buck, Sir Antony


Bevan, David Gilroy
Burt, Alistair


Biffen, Rt Hon John
Butterfill, John


Biggs-Davison, Sir John
Carttiss, Michael


Blackburn, John
Chope, Christopher


Blaker, Rt Hon Sir Peter
Clark, Dr Michael (Rochford)


Boscawen, Hon Robert
Colvin, Michael


Bottomley, Peter
Coombs, Simon


Braine, Rt Hon Sir Bernard
Cope, John





Cormack, Patrick
Newton, Tony


Cranborne, Viscount
Norris, Steven


Crouch, David
Onslow, Cranley


Dalyell, Tam
Penhaligon, David


Dorrell, Stephen
Powley, John


Dunn, Robert
Rathbone, Tim


Durant, Tony
Rhys Williams, Sir Brandon


Emery, Sir Peter
Rumbold, Mrs Angela


Eyre, Sir Reginald
Sackville, Hon Thomas


Fookes, Miss Janet
Sainsbury, Hon Timothy


Forth, Eric
Sayeed, Jonathan


Fraser, Peter (Angus East)
Shepherd, Colin (Hereford)


Garel-Jones, Tristan
Shersby, Michael


Greenway, Harry
Sims, Roger


Gregory, Conal
Skeet, Sir Trevor


Griffiths, Peter (Portsm'th N)
Spicer, Michael (S Worcs)


Ground, Patrick
Squire, Robin


Hamilton, Hon A. (Epsom)
Stevens, Lewis (Nuneaton)


Harris, David
Tebbit, Rt Hon Norman


Hayes, J.
Thompson, Donald (Calder V)


Howell, Ralph (Norfolk, N)
Thorne, Neil (Ilford S)


Jessel, Toby
Thurnham, Peter


Johnson Smith, Sir Geoffrey
van Straubenzee, Sir W.


Knowles, Michael
Viggers, Peter


Lennox-Boyd, Hon Mark
Waddington, David


Lester, Jim
Wallace, James


Lloyd, Peter (Fareham)
Wardle, C. (Bexhill)


Luce, Rt Hon Richard
Watts, John


McCrindle, Robert
Wells, Bowen (Hertford)


MacKay, John (Argyll &amp; Bute)
Wells, Sir John (Maidstone)


Maclean, David John
Whitfield, John


Malone, Gerald
Wolfson, Mark


Marek, Dr John
Yeo, Tim


Marland, Paul
Young, Sir George (Acton)


Marshall, Michael (Arundel)



Mather, Carol
Tellers for the Ayes:


Maude, Hon Francis
Sir Julian Ridsdale and


Neubert, Michael
Sir Eldon Griffiths.




NOES


Callaghan, Jim (Heyw'd &amp; M)
McQuarrie, Albert


Cocks, Rt Hon M. (Bristol S)
Maxton, John


Davies, Ronald (Caerphilly)
Prescott, John


Dixon, Donald
Sheerman, Barry


Duffy, A. E. P.
Skinner, Dennis


Eadie, Alex
Stewart, Andrew (Sherwood)


Evans, John (St. Helens N)



Gourlay, Harry
Tellers for the Noes:


McCurley, Mrs Anna
Mr. Nicholas Fairbairn and


McKay, Allen (Penistone)
Mr. Bill Walker.

Whereupon Mr. SPEAKER declared that the Question was not decided in the affirmative, Because it was not supported by the majority Prescribed by Standing Order No.32 (Majority for Closure.)

It being after Ten o'clock, the debate stood adjourned.

Orders of the Day — Industrial Training

Mr. John Cope (Treasurer of Her Majesty's Household): In the absence of my hon. Friend the Minister, who will be here shortly—

Mr. John Evans: Where is he?

Mr. Cope: —I beg to move,
That the draft Industrial Training Levy (Engineering Board) Order 1986, which was laid before this House on 14th April, be approved.
The order is before hon. Members today because one part of it involves a levy in excess of 1 per cent. of emoluments. Therefore, it requires an affirmative resolution of each House under section 12(6) of the Industrial Training Act 1982. I shall outline the full details of the levy order.
Hon. Members will be well aware, as I am in my constituency and as my hon. Friend the Parliamentary Under-Secretary is in his, of the importance of the engineering industry, which is the largest manufacturing sector in terms of employment. In 1985 engineering output rose by 5 per cent., the fourth consecutive year of growth.

Mr. Dennis Skinner: rose—

Mr. Speaker: Order.

Mr. Cope: Mechanical engineering in particular experienced its strongest growth since 1974 with output 6 per cent. above its 1984 level. If the industry is to build on those achievements, it is important that all firms play their part in training. We must ensure that employers continue to develop the skills of their work force in order to increase both productivity and growth.
I refer to the details of the levy. It is expected to raise about £171·5 million before taking exemption into account, and over £19 million after exemption. The levy will cover a period of 12 months to 31 August 1986, and it makes no changes to arrangements currently operating, which were approved by the House last year. It is in two main parts. In the mainstream of engineering establishments of 1,000 or fewer employees, where there is a levy of 1 per cent. of emoluments, 0·06 per cent. of the levy is non-exemptible. In larger establishments 0·06 per cent. is non-exemptible in respect of the first 1,000 employees, and 0·054 per cent. is non-exemptible in respect of the remainder.
For establishments in the mechanical and electrical engineering construction industry sector, the levy is in several parts, and my hon. Friend the Parliamentary Under-Secretary will give the details of that if the House requires it. The employer and employee members of the Mechanical and Electrical Engineering Construction Industry Sector Committee agreed to the levy unanimously and the proposals were subsequently endorsed by the board without dissent. Letters of support have been received from the two major employer organisations in the sector. There is thus consensus in the industry for the proposals, as required by the 1982 Act.
I therefore recommend the order to the House. It has widespread support and is necessary to meet the industry's future training needs. If there are any further points that any hon. Member would like to raise, my hon. Friend the Parliamentary Under-Secretary is here to deal with them.

Mr. Barry Sheerman: This is an historic evening, with the Government failing to get their business by two votes—[Interruption.]—and then with the appearance by the Minister, too late to bat when he was supposed to. I am sure the speech by the Whip, the hon. Member for Northavon (Mr. Cope), was every bit as good as the one that we might have had, had the Minister got here.

Mr. Evans: It was much better.

Mr. Sheerman: It is important to concentrate on the background against which we see the introduction of the order. I shall seek first to set the order in context because it was the original purpose of the engineering industry training board levy in the 1960s to assess the training needs of the engineering industry, which is so crucial to the industrial effort of our country. It was then the intention of the legislation that the engineering industry training board should levy the requisite amount of money to fund and carry out training appropriate to the needs of the industry and the country.
Originally, that levy was set at 2·5 per cent. It was based on a firm's payroll—the numbers employed—but it was intended to meet the real costs of training for that industry. Sadly—on reflection—there was such an outcry from industry and the employers' organisations that there was an early reduction to 1 per cent. of the payroll. That forced the original intentions of the EITB off the track. Since that time it has never been fully equipped to do the job envisaged for it by the initial legislation. That was to identify the training needs of the industry and the country, in the national interest, and to ensure that they were carried out.
Indeed, the EITB has been forced off the track particularly since the introduction of exemption certificates to the levy. Sadly, the income to the EITB has withered away. We see that 97 per cent. of firms in the engineering industry can claim exemption, and indeed do so. So much of the industry is exempted that the budget of the EITB is far too small to begin to perform the task that it should be doing. The basic criterion for exemption was too low and the system, as the Minister must know, does not work. The Government know that very well.
The effects of that background and the disastrous policies pursued by the Government on education and training since 1979 are clear in the even more clearly reduced circumstances of the industrial training boards in general, the closure of most of them and the fact that the engineering industry training board is supposed to stand on the sidelines while market forces and the philosophy of voluntarism triumphs.
After the abolition of most of the industrial training boards, and taking into account the cowed position of those which remain, 97 per cent. of engineering firms are exempted. The levy is too low and the exemptions are too many. The criteria for training done by industries to enable them to get out of training and paying the levy are laughable. There is a serious need to return to the original spirit of the engineering industry training boards when they were established. The reasons for that are clear if we consider the broad picture of education and training in Britain, and especially in engineering. In this crucial sector of our manufacturing industry, we see a total collapse, skill shortages and the decline of the skill base


of the engineering industry. Firms are poaching rather than training. The commitment to training has reached rock bottom. That is a sad position for a once great and proud industry. So much for the Government's devotion to the watchword "voluntarism" as though that was all that ever mattered.
The House would not wish me to rely merely on rhetoric to advance the seriousness of the position. I need rely only on the facts published by the board. The board's influence has withered away and its ability to influence industry has been undermined by the exemption certificate system. For the past three years and longer, the Opposition have warned the Government about what would happen to engineering training if they treated the problem as lightly as they have, and more pressure has been mounting to give exemptions to training so that they are almost universal.
The board compared April 1978 with April 1985. It carried out a spot check on one day in each month and these revealed that the numbers of those in training declined much faster than the decline in manpower in engineering. We are not juggling the figures. Even if we took into account the acknowledged decline in the industry's employment, we can see from the figures for engineering technicians that, in April 1978, there were 140 technicians in training for every 1,000 technicians in the industry. Sadly, that figure has declined to 90 for every 1,000 technicians. For craftsmen, the position is even more disastrous. In 1978, there were 145 men and women in training for every 1,000 engineering craftsmen. The figures today are down to 75 in 1,000, and that is a disastrous drop from 145 per 1,000.
Let us look at another interesting category. We may not associate industrial training boards with graduates, but in 1978 there were 160 graduate engineers per 1,000 in training in the industry. That was down to 120 in 1,000 in 1985. Those are the most reliable statistics. They are more sensitive and accurate than those published by the Department, because the EITB is so much closer to the industry.
What are we seeing in engineering apprenticeships overall? We know that between 1979 and 1986 they have halved, and that is during a period when we have seen a lack of skilled young men and women in industry. In 1979 we had 20,000 craft and technician apprentices. We now have fewer than 9,000. That is a disastrous decline.
It is estimated that we need between 4,000 and 5,000 apprentices coming out of training every year simply to meet the natural wastage caused by retirement. The sad fact is that we are not even producing enough apprentices to meet the natural wastage. The number has fallen from 20,000 to 9,000 and we are on a spiral into decline and frustration for our country and its economy.
I understand that just last week there was an MSC review of engineering industry training board funding which was generally pessimistic. We can expect even further cuts in the board's budget. I remind the Minister that in the past three years that has declined from £17 million to £5 million this year. That is the result of a wicked policy of moving away from the proper funding of proper training to short-term, pump-priming, gimmicky training that does no one any good.
Put those hard facts in the context of a recent independent survey which showed that Britain'ss manufacturing industry spends 0·15 per cent. of turnover on training yet our major industrial competitors spend

between 1 per cent. and 2 per cent. That is the measure of the problem that we in Britain face and the context in which the order is being moved this evening.
Put it in the context of a speech made by the chairman of the MSC, Mr. Bryan Nicholson, on 21 March, just a few days ago. He said that Britain' work force is "a bunch of thickies" compared with our competitor countries. That is a sad comment on seven years of Government control of our training programmes.
The MSC has also published a study by a respected firm of accountants—Coopers and Lybrand—entitled "A Challenge to Complacency". When it was published, Mr. Bryan Nicholson wrote to a large number of manufacturing companies in this country, but he received such a pathetic response that even he, whose appointment was made by this Government, is beginning to believe that the Government's adherence to voluntarism and market forces urgently needs to be reviewed.
The lessons to be learned in engineering could not be clearer. Any intelligent Government response would be properly to assess, plan and evaluate British engineering needs. When those needs had been assessed the Government ought to plan ahead for manpower needs, not to rely upon the day-to-day response of market forces. However, this Government do not like to plan ahead. Government resources and legislation would be required to raise the money to meet British engineering needs. That would be in the interests of both the industry and the country.
That brings me back to the order absolutely square-on. That was the original intention of the Engineering Industry Training Board and the levy system. How sad it is for this country's future productivity that we have moved so far from the original intention.
A comprehensive national strategy covering education and training is needed, of which the EITB should be a key part. Instead, the EITB, together with a few other training boards, is embattled, isolated and fragmented. It cannot train properly, because it is not part of a proper training system and is unable to grapple with the immense problems that face the engineering industry and this country. It has no hope of dealing with cross-sectoral problems and the regional problems that are so important to any industrial training plan.
Face-saving gestures are not needed, such as a department of education and training. That would not deal with the problems. It would divert the attention of the public away from the real gaps in our training strategy. We need a commitment to rise from the dead—I use that term reluctantly—this nation's education and training system and to introduce innovation, dynamism and growth.
Inadequate though it is, the Opposition do not intend to oppose the order. The EITB is still part of the slim 25 per cent. of industry that comes under the umbrella of the industrial training boards. Consequently we shall not vote against the order. However, that is not to be seen by anybody, particularly by the Minister, as meaning that we do not believe that the training system is in tatters. The EITB deserves more than the passing of this order. It needs to be completely reframed and resuscitated.

Mr. David Penhaligon: My view is that the situation is rather worse than that which has been outlined by the hon. Member for Huddersfield (Mr. Sheerman).I


do not argue about his statistics, but one of the ironies about this great nation, where the Industrial Revolution started, is that, although that historic fact can be denied by no one, Britain is an anti-technology and anti-industrial country. I say that, having reflected upon the attitudes expressed by members of the Civil Service and the education service, and by those in schools and universities and, indeed, Parliament.
I am one of the few hon. Members who is a qualified engineer. Among the middle classes and the better educated people there is a belief that one cannot be proud of engineering and technology, especially of the more mechanical sort, and that a career in engineering and technology is to be pursued only if other opportunities do not present themselves. That fundamental weakness is now catching up with us in terms of our competence in various skills.
I began my apprenticeship with an engineering company 24 or 25 years ago. On reflection, I recognise that the level of skills being taught then was insufficient, but that unsatisfactory state of affairs 24 or 25 years ago has become a great deal worse since then.
I do not intend to defend the former apprenticeship system. It had many merits, but it also had some weaknesses. It was a time-serving operation as opposed to a skill-acquiring operation. However, one is tempted to believe that, although the time-serving part of the apprenticeship system has been abolished, the skill acquisition side of it has not been introduced to the extent that is needed.
The order is all right as far as it goes, but, if we are to pull the country up in terms of competition and industrial production, a different attitude must be adopted at many different levels. For example, far too much of Britain's production engineering is designed by skilled engineers, not using the skills which exist within their companies, but making up for the skills not available within their companies. Job elements are reduced to the minimum so that someone with a few weeks or days training can do the job. That will not build an international reputation for the level of competence in engineering products that we must have to survive as an industrial country.
The Government are in charge and they have power to influence such matters. I urge the Government to reexamine the level of skills acquired in our nation—at all levels. I am not talking only of manual skills. Manual skills are of tremendous importance and I do not underestimate them, but some people seem to believe that all that we have to acquire are manual skills. That is not so. We must acquire low technician skills, high technician skills and entrepreneurial, fresh and new engineering skills. All those skills are required if the country is to get out of the mire.
I have been a Member of the House for about 12 years, and the more that I become influenced by my friends in London, as opposed to my friends in Cornwall, the more I am persuaded of the view that there is, at a middle and upper class level inwards, an anti-technology and anti-making things attitude. Britain's living standards rely upon those who can make things, mine things, grow things or catch things. The country has no other means of wealth production.
The mining people are experiencing difficulties in Cornwall—to put it mildly. For all that, we cannot

develop a series of policies which expand Britain's poor capacities when in the long run, in this great nation of ours, there is nothing like an economic future for them. Some Government of the future must turn around this long-ingrained attitude that exists in the British person and British society which, ironically, is anti-technology. That is amazing in view of Britain's history of industrial revolution and innovation over the last 50 to 100 years.

The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier): I apologise unreservedly to the House for my discourtesy in not being present when the debate began.
The hon. Member for Huddersfield (Mr. Sheerman) said that he would set the order in context, but he failed to do that. He ended his remarks by saying that the Opposition did not intend to oppose the order because he thought that to a certain extent it was fair enough. There was something of a dichotomy in what he said to the House. He suggested that the budget was far too small for the engineering industry training board and the purpose for which the board wished to use that budget. However, the House is aware that the board is made up of representatives of the trade union movement and employers. The board was unanimous in its decision that this order should be presented to the House.
There is no difference of opinion between the hon. Member for Huddersfield (Mr. Sheerman) and myself as to the importance of training. We both consider it an important investment and not a cost. When the hon. Gentleman suggests that the levy is too low—I think he used those specific words—why did the ITB decide to agree unanimously to the measures which we are considering tonight?
The hon. Gentleman referred to the decline in engineering, and, more specifically, to the decline in apprenticeships. However, the decline in apprenticeships was arrested as a result of the introduction of the youth training scheme. There is evidence of that fact and I discussed that when we considered the matter in Committee at an earlier date.
I am concerned about some of the hon. Gentleman's allegations about those training organisations which now come under the umbrella of non-statutory training organisations. The hon. Gentleman will be interested to hear that I have recently written to all the NSTOs previously covered by ITBs asking them precisely what they are doing at the moment. It is some time since we introduced legislation to rearrange the training and to keep some statutory training organisations and some non-statutory. I shall be interested to learn what is the current state of play and whether they have honoured the undertakings they gave when they were applying to the consultation exercise with regard to tackling certain ITBs. I am sure the hon. Member for Huddersfield will be interested in their answers.
I welcomed the intervention of the hon. Member for Truro (Mr. Penhaligon). He also referred to apprenticeships and I sympathise with what he said. The hon. Gentleman suggested to the House that there was an anti-technology feeling in Britain. I would go further and suggest there is an anti-industry or anti-manufacturing feeling in Britain.
That is one of the reasons why the hon. Gentleman and I welcome Industry Year 1986. This is another opportunity


for us to dispel the dirty overalls image of manufacturing industry. I know that the hon. Member for Huddersfield will welcome the fact that much is being done by the trade unions in Industry Year, as well as by the CBI, the Institute of Directors and other employer organisations. These bodies and the Church are trying to get the message across about the improved interface between industry and education.
We should have done this 40 years. I am not making a party political point; it does not matter who was in power at the time. The effort has been made a little late in the day, but it is never too late. Many moves are afoot to try to dispel the dirty overalls image of industry and that must be for the betterment of improved relations between industry and education.

Mr. Trippier: Some time ago I had the privilege of launching a video, which has gone to every secondary school in the land, entitled "To be an engineer". This works to dispel the dirty overalls image of engineering. I hope it will improve the image of engineering specifically, and I hope it will convince not only youngsters to consider engineering but also their parents. That is important.

Mr. Andrew Rowe: My hon. Friend mentioned the interface between education and training. Does he agree that the dramatic shortage of mathematics teachers in schools—

Mr. Deputy Speaker (Mr. Harold Walker): Order. We are discussing the industry training board levy, not training and education in general.

Mr. Trippier: I know that my hon. Friend has an important interest in this subject. I am sure that I am to blame for leading him down that path. Those who concentrate on that subject in school would have a natural bent towards engineering later in life.
I pay tribute to the hon. Member for Truro (Mr. Penhaligon) for introducing this important aspect of what we are trying to achieve in 1986—a matter that draws all sides of the House together.

Mr. Sheerman: Surely the Minister is aware that, on a public relations level, of course the matter draws the House together, but we are deeply divided by the fact that the Government have not put in the resources for the

training that is needed. Voluntarism does not work. The Minister has not said how he will get the Government to see that, and get money into training.

Mr. Trippier: The hon. Gentleman says that voluntarism does not work. He is prejudging the results of the consultation exercise that I am conducting, which will be open to public scrutiny when it is completed. I am sure that the hon. Gentleman welcomes the fact that I have written to the NSTOs inviting their views about what is going on. The hon. Gentleman may be in for a surprise. Perhaps I might put it a little more strongly. The hon. Gentleman may be in for a pleasant surprise—it was to me—to discover that some of the NSTOs have gone a little further and done much more than they ever did when the training bodies were statutory. The hon. Gentleman is a little premature suggesting the outcome of the consultation exercise.

Mr. Penhaligon: If a young man or woman has designs on becoming a competent technician engineer not a graduate or craft engineer, how would the Minister suggest he or she goes about it? Surely he is not telling us that YTS, although it has some advantages, is the most obvious course?

Mr. Trippier: The hon. Gentleman is not making a valid point. Apart from the normal channels, which have been open for some time, YTS can play a significant part in the youngster gaining credit towards a proper craft apprenticeship which would be recognised by a validating body, which would enable him or her to be qualified.
I welcome the fact that, broadly, the alliance welcomes YTS. The hon. Member for Huddersfield is invariably supportive. I despair of some of his hon. Friends, who try at every possible opportunity to knock or rubbish it. It has proved the most successful training scheme that we have had and it bears comparison with international programmes or schemes.
We have had a useful and interesting debate. I am grateful to the hon. Member for Huddersfield for saying that the Opposition will not oppose the order, and I commend it to the House.

Question put and agreed to.

Resolved,
That the draft Industrial Training Levy (Engineering Board) Order 1986, which was laid before this House on 14th April, be approved.

Orders of the Day — 10, Downing Street (Chief Information Officer)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boscawen.]

Mr. Tam Dalyell: The genesis of this debate on the post of chief information officer at No. 10 is to be found in the exchange on the Floor of the House on Monday 14 April, which is in Hansard at column 575.
I interject that I welcome the presence of the Leader of the House. It is good parliamentary practice when Mr. Speaker can oblige those of us who in genuine circumstances have had to resort to the time honoured phrasing, "On a point of order. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the issue on the Adjournment at the earliest opportunity."
I am acutely aware that in our system a civil servant cannot directly answer criticisms of him made on the Floor of the House, so let me say at once that my criticisms are directed not at Mr. Bernard Ingham, but at his boss, the Prime Minister, a politician who can answer back, and at the way at which she has allowed and encouraged Mr. Ingham to go about his business.

Mr. David Harris: Shameful.

Mr. Dalyell: An hon. Member on the Government side shouted "Shameful."
I am not alone in these opinions, and I should like to quote from one of the grandest mandarins in Whitehall in the 1970s, Sir Frank Cooper, permanent secretary to the Ministry of Defence. In the Suntory Toyota lecture, he said:
A further paradox is that the more it has become technically easier to communicate the less good has that communication become between Government and the governed. Indeed, the aim now is the management of the media with a very much higher degree of central control from No. 10 Downing Street and with the connivance of a part of the media. There is now public relations—which I would define as biased information. I suggest that the post of Chief Informatiion Officer at No. 10 Downing Street is in fact a political job in a party sense and is not a job which it is proper for a Civil Servant to fill unless he or she resigns from the Civil Service on appointment. Moreover, what is said ought to be said on the record. The participation of the media in the lobby system is a public disgrace.
That is Sir Frank Cooper's view.

Mr. Harris: I am the person who shouted "Shameful" at the hon. Member for Linlithgow (Mr Dalyell) for his attack on a civil servant. The hon. Gentleman was a parliamentary private secretary to the late Richard Crossman. After the debate, perhaps I could refer him to the Crossman diaries. The section dealing with 28 September 1966 says that the hon. Gentleman's boss spent most of the day trying to work out how he could manipulate the press and the Government information services for the then Labour Government. Will the hon. Gentleman refresh his memory about what happened in those days of a Labour Government

Mr. Dalyell: I can refresh my memory clearly. There are different views on this. Sir Donald Maitland, for example, would not have acted in the way that a number of other chief information officers have acted. I take seriously the remarks by the hon. Member for St. Ives (Mr. Harris), because I remember 1966 only too well.
There are problems here. That is why I was careful to say that I was getting at the politicians, not the civil servant who cannot answer back, rough though that civil servant may have been. It is not a cheap attack. In page 60 of Henry Porter's "Lies, Damned Lies" we are told that the advice that Mr. Ingham gave was that
remedial action should be taken against troublesome journals, whether national, provincial or specialist.
Porter and others have at least to be answered.
What I am saying is a serious reflection on the job specification. Is it appropriate, for example, for a civil servant on his own initiative to offer cover for selectively leaking a Law Officer's letter? What sort of position did Mr. Ingham imagine that he was putting Miss Collette Bowe into when he required her to phone Mr. Chris Moncrieff with the selective contents of the Solicitor-General's letter over Westland? Can one imagine Sir Donald Maitland, the late William Clark, Sir Tom McCaffrey or any other holder of the office deeming it proper or ethical to make any such request of a civil servant colleague? [Interruption.] If the hon. Gentleman would like to name names, I shall listen to him.

Mr. Harris: The hon. Gentleman says that he is not attacking this civil servant. The allegations that he has made are a blatant attack on a civil servant who, because of the rules of procedure, is incapable of answering back. As I said in a seated interjection earlier, I think that that is shameful.

Mr. Dalyell: The reply is that any traditional civil servant proposing to do that which ethically he knew he should not do would seek a prime ministerial instruction. Did Mr. Ingham ask the Prime Minister on 6 January about the leaking of the Solicitor-General's letter? After all, the Prime Minister was next door in the very same 10 Downing street building and the then Secretary of State for Trade and Industry was in his Yorkshire constituency. Why are the Prime Minister and Mr. Ingham so coy about appearing before the Select Committee on Defence that is considering the Westland affair on behalf of the House? It was the Prime Minister who endorsed the reference of the Westland affair to the Select Committee of which my right hon. Friend the Member for Dudley, East (Dr. Gilbert) is a distinguished and leading member.
There is one of two explanations. Either Mr. Ingham asked the Prime Minister about the Solicitor-General's letter, or Mr. Ingham knows the Prime Minister's mental processes so well that he knows instinctively what she would want done. If an answer were given at all, was it along the lines, "You know what I think and would want done"—wink, wink?
It would seem most unlikely that the Prime Minister felt that the former Secretary of State for Trade and Industry had done anything very wrong in her eyes, bearing in mind that at the time of his resignation she was reported to have spent over an hour trying to dissuade him from resigning. After his resignation, the Prime Minister was reported as indicating that she hoped it would not be long before he was back in a senior position in the Government.
I have no brief for the right hon. and learned Member for Richmond, Yorks (Mr. Brittan), but, to put it bluntly, he was the fall guy. Many of us would agree with what Mr. Alan Watkins has stated in print—that he has heard from leading Conservatives that "Poor Leon is carrying the can". We all have to judge one another in this place. I do not find it believable that the former Secretary of State for


Trade and Industry, a careful QC, let alone a former Home Secretary, would dream up the device of selectively leaking a Law Officer's letter. Cover having been offered to Collette Bowe, there is only one explanation why Mr. Ingham was not dismissed in the aftermath of the Westland affair—that either implicitly or explicitly the Prime Minister approved of Mr. Ingham's action in giving cover.
We should go into these matters in some detail. On 5 February the Select Committee questioned Sir Robert Armstrong in case he might be able to provide answers which would make it unnecessary to call the five civil servants, including Bernard Ingham and Collette Bowe, as Sir Robert had interviewed them all during his inquiry. However, the Committee still reserved its right to call them if not satisfied with the information obtained from Sir Robert.
It is clear that the Committee was not fully satisfied, because it asked Sir Robert to appear before it again to answer some further questions. This he did on 5 March. However, there were a number of questions which Sir Robert was not prepared to answer. My right hon. Friend the Member for Dudley, East, who is present, asked about the officials' knowledge of the special status of the Law Officers' letters. Sir Robert would not answer. My right hon. Friend asked him if the only person who could answer was Mr. Ingham. Sir Robert said that he could answer but was not prepared to do so. My right hon. Friend then asked:
Then the only person who can answer is Mr. Ingham?
Sir Robert appeared to indicate that that was so. My right hon. Friend asked Sir Robert:
If you can't answer, the only people who can are Mr. Powell and Mr. Ingham.
In reply to several questions Sir Robert took refuge in repeatedly quoting the Prime Minister's reply to me on 27 January, the oft-repeated reply:
I gave my consent."—[Official Report, 27 January 1986; Vol. 90, c. 650.]
It is of interest to note that on 5 March Sir Robert Armstrong said that the five civil servants were not responsible for the way that the leaked letter was handled, as the former Secretary of State for Trade and Industry had taken full responsibility for the way in which the information was disclosed. It is of even greater interest to note that on his earlier appearance on 5 February, Sir Robert made a different statement. He said that when the letter arrived at the Department of Trade and Industry, the then Secretary of State was out fulfilling a luncheon engagement, that an official had read the letter over the telephone to him, and that the then Secretary of State had decided that it should be brought into the public domain.
Sir Robert emphasised that while the then Secretary of State had authorised the disclosure, it had been the officials who had decided on the method to be used. Sir Robert summed up by telling the Committee that, although the former Secretary of State wanted the information brought into the public domain before the Westland press conference that day, he did not say how this was to be done.
From all this, and particularly in view of Sir Robert's inability or unwillingness to answer questions himself, I believe that on 5 March the need to call for evidence from certain key civil servants had been positively established. To save time, I shall refer to the article by Richard Norton-Taylor in The Guardian on 11 March.
On 1 April, Mr. John Carvel wrote in The Guardian that Labour members of the Committee were planning to repeat their request to examine the officials, particularly Mr. Ingham. He also wrote:
The Committee has been advised that a request from Mr. Ingham would be refused by the Prime Minister, but that if the Committee instructed him to attend, he would turn up and say nothing.
Although, in theory, the Committee's wish to see the civil servants was still on the table, arrangements were being made to have the final hearing, which a Minister would wind up. On 10 April, The Guardian reported that, at a private meeting of the Committee, the Labour members' move to summon the five civil servants or just Mr. Ingham was defeated.
A question along the following lines could properly be put to the Prime Minister. "It was reported in The Guardian on 1 April 1986 that the Defence Committee had been advised that a request for Mr. Ingham to attend would be refused by the Prime Minister but that if the Committee instructed him to attend he would turn up and say nothing. Is it true that the Prime Minister would refuse to allow Mr. Ingham to appear and, if so, bearing in mind Sir Robert Armstrong's inability to answer questions put to him by the Committee, on what grounds would the Prime Minister refuse to allow Mr. Ingham to appear?" If the Prime Minister replied that she would not refuse to allow Mr. Ingham to appear, the following question might then be asked: "Would the Prime Minister think it appropriate for Mr. Ingham to appear before the Committee and then to refuse to answer its questions?" Why should a civil servant—the chief press officer—be subject to special treatment before Committees of the House of Commons that does not extend to the generality of civil servants?
Westland is not simply a one-off episode. There is a whole litany of operations unbecoming to a civil servant. As one who gave evidence to the Franks Committee for an hour and 25 minutes, I was appalled at the way that the chief information officer gave that complicated report to the Lobby correspondents at 3.30 pm when their deadlines were at 5 pm. This is not the kind of guidance that a civil servant should give on behalf of the Prime Minister, but it is not the civil servant that I blame; it is the Prime Minister, because I bet that the instructions were hers. Did not Mr. Ingham have to apologise to the Lord Chancellor for suggesting that Judge Jeffries might be the appropriate judge to preside over the trial of Clive Ponting at the Old Bailey?
We are tonight not considering the role of a mere press secretary, but dealing with the position of a man who is an adviser on central decisions of Government in Britain, and whose power has grown exponentially, along a geometric progression, with the years during which he has occupied the office. The longer a man occupies this office, the more power accrues to him.
I do not think that I exaggerate if I say that, with the arguable exception of Sir Robert Armstrong, Mr. Bernard Ingham has evolved as the most important man making decisions in British politics. When I put this view to a senior Conservative Privy Councillor, he shook his head sadly and said that he could not dissent.
The blame must rest not with Mr. Ingham but with the Prime Minister who has become so dependent and has allowed this to happen. This is an unsatisfactory position.

The Minister of State, Privy Council Office and the Minister for the Arts (Mr. Richard Luce): The hon. Member for Linlithgow (Mr. Dalyell) is well known for his persistence on many issues. He certainly gave the House notice recently that he would raise this issue about the chief press secretary at No. 10. Having listened to him, I believe that he is misguided in his views. Indeed, I would go further: the hon Gentleman is continuing to demonstrate his ability to develop obsessions—I can think of no other word—about issues, and to formulate some allegations which are completely unsubstantiated but which become genuine figments of his imagination. I can give an exact example of that from the end of his speech when he referred to Mr. Ingham as one of perhaps two men in Government who take the most important decisions. That is an exact description of a figment of his imagination. Nothing could be further from the truth.
The hon. Gentleman proceded to talk about the so-called Westland affair, and, more precisely, the events surrounding the disclosure of the Solicitor-General's letter which have been fully explained to the House by my right hon. Friend the Prime Minister on both 23 and 27 January. My right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) contributed to the debate on 27 January. The events were the subject of an inquiry conducted by the head of the home Civil Service who subsequently gave evidence to the Defence Select Committee on 5 February and 5 March. The role of officials in this matter has thus been fully described and explained to the House and the public, and I have nothing tonight to add to what has been said. If the hon. Gentleman thinks that there is some great or sinister matter still to discover, I can assure him that he is completely mistaken. This issue is worn to a frazzle.
I shall seek to answer the debate by concentrating on the role of the chief press officer and the most unfair allegations that the hon. Gentleman makes about Mr. Ingham.

Mr. Jonathan Sayeed: Will my hon. Friend say whether he believes that Mr. Ingham has acted in any way different from the way in which Mr. Joe Haines acted when he was chief press officer to Lord Wilson of Rievaulx when he was Prime Minister?

Mr. Luce: I can establish that. I know that Mr. Ingham has managed to maintain a steady and continuous relationship with the Lobby which has not always been the case in the past.
The hon. Gentleman argued that the post of chief press secretary should be a party political appointment, and that it is no longer possible or right for the holder of that office to be a civil servant. He cites in support of that the views of Sir Frank Cooper, ex-permanent secretary at the Ministry of Defence, in a recent lecture. Obviously, both Sir Frank and the hon. Gentleman are entitled to their views on this, as on any other matter, but I do not agree with them.
It is important to stress the role of the chief press officer or any information officer. It is to promote an informed press and public about the Government's policies and measures, and to advise Ministers and officials on presentation.
Obviously, the chief press officer will aim to ensure that the merits of those policies and the arguments in their

favour are brought as fully as possible to the public's attention. He would be failing in his job if he did not do that. But it is his job, as it is the job of all civil servants, to serve his Minister as a member of the Government to th best of his ability, to give him well-informed, dispassionate and impartial advice, and to give effect to the Minister's decisions with skill, vigour and loyalty. The present chief press secretary at No. 10 Downing street does just that.
On 23 January this year, my right hon. Friend the Prime Minister said:
I should like to say that Mr. Ingham has served successive Governments with devotion and dedication, and I have great confidence in him."—[Official Report, 23 January 1986, Vol. 90, c. 459.]
That is absolutely right.
Let us look at Mr. Ingham's career—19 years as a professional journalist and about 19 years as a civil servant, of which 17 have been as an information officer. He has endless experience in information services within government. It is notable that Mr. Ingham has served loyally as an information adviser both Labour and Conservative Governments. It is notable that he has been an information officer to Mr. Varley, and to Barbara Castle. Above all, quite apart from his service to the Prime Minister, he has been an information adviser to the right hon. Member for Chesterfield (Mr. Benn). If Mr. Ingham is capable of serving the right hon. Gentleman and my right hon. Friend the Prime Minister, that is a sharp demonstration of his ability to provide an impartial service as a loyal civil servant with a great deal of integrity. The allegations of the hon. Member for Linlithgow should be totally and utterly refuted.

Mr. Dalyell: If Mr. Ingham has such integrity and is a loyal civil servant, why, with all that experience, did he give cover to Collette Bowe in giving information to Mr. Chris Moncrieff of the Press Association in the form of a leaked Law Officers' letter? A man of such integrity and experience would not have done that unless he either knew the Prime Minister's mind or had prime ministerial instruction. It is the Prime Minister who is at the root of that trouble.

Mr. Luce: As I have already said, this issue has been gone over time and time again. My right hon. Friend the Prime Minister and Sir Robert Armstrong have given substantial evidence on it. Of course, we await the report of the Select Committee on Defence.
The feeling seems to be that the fact that the chief press secretary deals with the media somehow makes it party political. I agree that the need to deal with the media means that particular skills and qualities are required of an information officer that may not always be required for other jobs in the Civil Service. That is why many, although by no means all, information officers come, as the chief press secretary at No. 10 came, from within the Government Information Service. Information officers must, of course, have the ear of their Ministers but must also have a detailed knowledge of their Department and its responsibilities so that they are well placed to present them to the media. That does not make the task a party political one—indeed, it is the task, for example in the Conservative party, of the party chairman and others to speak for the party.
I wonder whether the correspondents who deal from day to day with information officers would prefer them to


be political appointees. The reputation and the effectiveness of information officers depend on our contacts being able to rely on what they say. If they were party political appointees, there would be a much greater danger of suspicion that the information coming out of the Department was being distorted for party political considerations. It is a matter of establishing credibility and trust.
It is worth quoting from a speech in May 1983 in Cardiff by Mr. Ingham to a conference of the Guild of British Newspaper Editors in which he said:
no one will, or should, take the slightest notice of a word I say if I cannot be relied upon to get it right; my crucial stock-in-trade is reliability; otherwise I lack credibility and cease to be useful either to Government or media".
That is correct. I believe that it is true that Mr. Ingham is widely respected and generally respected by the press for that.
I do not agree that there is something special about the post of the chief press secretary at No. 10, apart from the fact that it is one of the two top jobs in the Government Information Service. Like any other job in the Prime Minister's office, the holder of this must be exceptionally able. A close relationship with Ministers and the ability to command the respect of the press are the essential requirements of the job, as the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) emphasised in his evidence to the Treasury and Civil Service Sub-Committee. As I have just said, to serve a Minister successfully, any civil servant must gain his confidence. Therefore, there is no difference there. Any senior civil servant, chief information officer or permanent secretary, must advise a Minister clearly and in an unbiased manner and carry out the Minister's instructions. Therefore, there is no difference there. All senior civil servants, in advising Ministers, are serving the Government and not a political party. Again, there is no difference with No. 10.
Of course, the chief press secretary at 10 Downing street, like departmental chief information officers, has to have an understanding of political sensitivities and of the political framework and environment within which his Minister and the Government of which he is a member are operating. However, there is nothing unique about that. It is no less true of all civil servants who are in the business of advising Ministers and executing their policies.
History shows that civil servants are no less capable than others of carrying out the duties of the chief press secretary effectively and acceptably. Over the past 20 years there have been both civil servant and journalist holders of the No. 10 chief information officer job. The civil servants concerned have shown themselves perfectly capable of presenting the policies of whichever administration was currently in power. I believe that journalists would agree that the civil servant holders have performed no less satisfactorily than professional journalist occupiers of the post.
I have sought to demonstrate why, in the Government's view, Mr. Ingham is doing an excellent job and why there are strong advantages in having an experienced civil servant to do the job. I think that in answering the debate generally I must take the opportunity to say that my experience as a Civil Service Minister points to the fact that civil servants as a whole, including Mr. Ingham, serve this Government, as they would serve any Government, loyally, professionally and with integrity; and I believe that we can be proud of them.

Mr. Dalyell: If the emphasis is to be put on obeying ministerial instructions, we are now left with the fact that it was the Prime Minister's instructions, implicit or explicit, which offered the cover to Miss Bowe to leak the Solicitor-General's letter against one of her own Ministers. The Minister's reply does not put Mr. Ingham in a bad light but the Prime Minister. If all that he says about the chief press officer's virtues is true, the Prime Minister has to say how, if she was so loyally served by a man obeying ministerial instructions, cover was given to leak a letter against one of her own Ministers. After tonight it is the Prime Minister, not Mr. Ingham, who is in the dock.

Mr. Luce: The hon. Gentleman is continuing to try to make political capital out of an issue from which it is no longer possible to make any political capital. The issue has been covered time and again by my right hon. Friend the Prime Minister, the Secretary to the Cabinet and the head of the home Civil Service who has given evidence to the Select Committee on Home Affairs.

Question put and agreed to.

Adjourned accordingly at eighteen minutes past Eleven o' clock.